1977 (8) TMI 63 - HC - Customs

Vessel retains foreign-going status during repairs under Customs Act, 1962. Court rules in favor of exemption.

The vessel M.V. Jala Durga was held to qualify as a 'foreign going vessel' under the Customs Act, 1962, by the Court. Despite undergoing repairs in dry ... Foreign going vessel - going vessel' Issues:1. Whether the vessel M.V. Jala Durga qualifies as a 'foreign going vessel' under the Customs Act, 1962.Analysis:The petitioner, an existing company under the Companies Act, 1956, owns the vessel M.V. Jala Durga, engaged in carrying goods between Indian and foreign ports. The vessel arrived at Calcutta Port from the United States with cargo and underwent repairs in dry docks before loading export cargo. The vessel was detained in the dry docks from 19th February, 1971, to 20th March, 1971, and loaded export cargo from 20th March, 1971, to 24th March, 1971. The vessel then sailed for the United States, carrying goods and undergoing repairs during its stay in Calcutta.The Customs Act, 1962, defines a 'foreign going vessel' as one engaged in carrying goods between Indian and foreign ports. Imported stores on board such vessels can be consumed without duty payment during their foreign-going period. The Imported Stores (Retention on Board) Regulations, 1963, exempt imported stores from duty payment while the vessel is not a foreign-going vessel, provided they are under Customs seal. However, this regulation does not apply to imported stores during the vessel's foreign-going period.The petitioner contended that the vessel, though undergoing repairs in dry docks, remained a foreign-going vessel as it was making preparations to carry cargo to foreign ports. The repairs were necessary for the vessel's proper functioning during its voyage to foreign ports. The delay in repairs did not change the vessel's status as a foreign-going vessel engaged in carrying goods between Indian and foreign ports.The Court held that the vessel M.V. Jala Durga qualified as a 'foreign going vessel' under the Customs Act, 1962, even while undergoing repairs in dry docks. The vessel's repairs were essential for its voyage to foreign ports with export cargo, maintaining its foreign-going status. Therefore, the Court ruled in favor of the petitioner, issuing writs to cancel the demands made by the Assistant Collector of Customs regarding duty on consumed imported stores.In conclusion, the judgment clarifies the criteria for determining a vessel as a 'foreign going vessel' under the Customs Act, emphasizing the vessel's engagement in carrying goods between Indian and foreign ports, even during repair periods. The decision upholds the petitioner's claim and highlights the vessel's continuous foreign-going status despite undergoing repairs, ensuring exemption from duty on consumed imported stores.