Customs exemption in force at territorial waters entry survives later notification expiry and bars duty demand.

Goods wholly exempt from customs duty under a notification in force when the carrying vessel entered the territorial waters of India retained that exemption even if the notification expired before inward entry, presentation of the bill of entry, or clearance for home consumption. Section 25 of the Customs Act, 1962 was applied at the point of entry into territorial waters, and once exemption existed at that stage, later withdrawal of the notification did not defeat it. The demand for duty therefore could not be sustained.

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Issues: Whether goods wholly exempt from customs duty under a notification in force when the carrying vessel entered the territorial waters of India could be denied the exemption because the vessel entered inwards after the notification had expired.

Analysis: The exemption under Section 25 of the Customs Act, 1962 was treated as operative at the relevant point when the goods entered the territorial waters of India. The goods were wholly exempt from duty, and once that condition existed at the time of entry into territorial waters, subsequent withdrawal or expiry of the notification before inward entry, presentation of the bill of entry, or clearance for home consumption did not defeat the exemption.

Conclusion: The exemption was to the petitioners, and the demand for duty could not be sustained against them.

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