1987 (2) TMI 62 - SC - Customs

Vessels imported for specific purposes qualify as goods for home consumption under customs law despite occasional overseas use

The SC held that vessels can constitute 'goods' under customs law when imported for specific purposes. The court determined that for customs duty ... Whether the vessels are goods brought into India for home consumption? Whether a transhipper is an ocean-going vessel? Held that:- It may be that in Section 46(2) and elsewhere the word `goods' is used in such a way as not to include and as contradistinguished from the conveyances in which the goods are carried, depending upon the context. But that does not mean that despite the definition, the word is never to be understood as defined and that it should always be interpreted as never to include vessels, aircraft and vehicles even when there is nothing in the context justifying their exclusion. We can see no justification for holding that a vessel is not `goods' for the purposes of Section 46(1). For the purpose of the levy of Customs Duty, in order to determine whether any imported goods are `goods for home consumption', we have to find out the primary intended use of the goods when the goods are brought into Indian territorial waters. If the goods are intended to be primarily used in India, they are goods for home consumption notwithstanding that they may also be used for the same or other purposes outside India. We guard ourselves against saying that the converse may be true. The question whether goods not intended to be primarily used in India but used occasionally for short periods in India also fall within the meaning of the expression `goods for home consumption' has not been examined by us. We have only considered the question whether goods brought into India for use primarily in India are goods for home consumption notwithstanding that they are occasionally or incidentally used outside India. We are of the view that they are. The vessels, in these two cases, were brought into India to be used primarily as Transhippers at Mormugao, though used incidentally or occasionally to go into the open sea. They are, therefore, `goods for home consumption' and not ocean-going vessels for the purposes of the Customs Act. After their conversion they were no longer ocean-going vessels, in the full sense of the term that is in the sense that their pre-dominant purpose was use as ships traversing the open seas. It was, therefore, necessary to present Bill of Entry in respect of both the vessels. Appeal dismissed. ISSUES PRESENTED and CONSIDEREDThe primary legal questions considered in this judgment were:Whether vessels converted into transhippers and used for topping up operations in Indian territorial waters are classified as 'goods' under Section 46(1) of the Customs Act, 1962, thus necessitating the filing of a Bill of Entry for home consumption.Whether such vessels, despite being capable of ocean-going operations, should be classified as ocean-going vessels exempt from the requirement of filing a Bill of Entry.The interpretation of the term 'goods' within the context of Section 46(1) of the Customs Act, considering the inclusive definition provided in Section 2(22) of the Act.Whether the primary intended use of the vessels upon entry into Indian territorial waters determines their classification for customs purposes.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe legal framework primarily involves the Customs Act, 1962, particularly Section 46(1), which mandates the filing of a Bill of Entry for goods imported for home consumption. Section 2(22) defines 'goods' to include vessels, aircraft, and vehicles. The Act's provisions on customs duty and the classification of goods for home consumption are central to the case.Court's Interpretation and ReasoningThe Court interpreted the term 'goods' as defined in Section 2(22) to include vessels, thereby necessitating the filing of a Bill of Entry under Section 46(1) for vessels imported into India for home consumption. The Court emphasized that the legislative intent behind the inclusive definition was to subject vessels to the customs duty net when imported into India.Key Evidence and FindingsThe vessels in question, 'Maratha Transhipper' and 'Priyamvada,' were originally ocean-going vessels converted into transhippers for topping up operations at Mormugao Harbour. The conversion involved significant modifications, and the vessels were primarily used for topping up operations within Indian territorial waters, although they retained the capability for ocean-going voyages.Application of Law to FactsThe Court applied the definition of 'goods' to the vessels, emphasizing their primary intended use upon entry into Indian territorial waters. Despite their capability for ocean-going operations, the vessels were primarily used as transhippers for topping up operations, classifying them as goods for home consumption under the Customs Act.Treatment of Competing ArgumentsThe appellants argued that the vessels should be classified as ocean-going vessels, exempt from filing a Bill of Entry. They contended that the scheme of the Customs Act implied that vessels were not 'goods' for the purposes of Section 46(1). The Court rejected these arguments, emphasizing the legislative intent and the primary use of the vessels within India.ConclusionsThe Court concluded that the vessels were 'goods' for home consumption, requiring the filing of a Bill of Entry under Section 46(1) of the Customs Act. The primary use of the vessels as transhippers in Indian territorial waters determined their classification for customs purposes.SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal ReasoningThe Court stated, 'We must proceed on the basis that such a definition is designed to achieve a result. Under Section 12 of the Customs Act what are dutiable are goods imported into or exported from India and if goods are defined to include vessels, aircrafts, and vehicles, we must take it that the object of the inclusive definition was to bring within the net of taxation vessels, aircrafts, and vehicles which are imported into India.'Core Principles EstablishedThe judgment established that the definition of 'goods' in the Customs Act includes vessels, thereby subjecting them to customs duty when imported for home consumption. The primary intended use of the vessels upon entry into Indian territorial waters determines their classification for customs purposes.Final Determinations on Each IssueThe Court determined that the vessels were not exempt from filing a Bill of Entry as ocean-going vessels. The primary use of the vessels as transhippers within Indian territorial waters classified them as goods for home consumption, necessitating compliance with Section 46(1) of the Customs Act.