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Issues: (i) Whether an ocean-going vessel, later broken up, remained exempt from customs duty under the exemption notification; (ii) Whether, for computation of duty under the proviso, the relevant rate was the rate in force on the date of importation of the vessel.
Issue (i): Whether an ocean-going vessel, later broken up, remained exempt from customs duty under the exemption notification.
Analysis: The notification granted exemption to ocean-going vessels, but the proviso limited that exemption by providing that if such a vessel was subsequently broken up it would become chargeable with the duty payable if it had been imported for breaking up. The proviso was held to qualify the general exemption and to confine it up to the point when the vessel was broken up. The vessel could not claim permanent exemption merely because it was originally imported as an ocean-going vessel.
Conclusion: The issue was decided against the assessee; customs duty remained leviable under the proviso when the vessel was broken up.
Issue (ii): Whether, for computation of duty under the proviso, the relevant rate was the rate in force on the date of importation of the vessel.
Analysis: The governing provision fixed the applicable rate with reference to the date on which the imported goods were presented under the customs machinery, but the statement filed in the present case was treated as a misdescribed bill of entry. For a vessel covered by the proviso, the duty payable is the duty that would have been payable had it been imported for breaking up, which necessarily ties the computation to the date of the vessel's original importation. The later date of filing or noting of the statement was therefore not material for the rate of duty.
Conclusion: The issue was decided in favour of the assessee; the duty had to be calculated at the rate prevalent on the date of importation in 1963.
Final Conclusion: The writ was allowed to the extent of quashing the appellate customs order and directing refund of the excess duty collected on the basis that the applicable rate was the one prevailing at the time of importation.
Ratio Decidendi: Where an exemption for imported ocean-going vessels is expressly limited by a proviso making the vessel chargeable upon subsequent breaking up, the duty payable is computed with reference to the rate applicable on the original date of importation, not a later date of filing or noting of customs papers.
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