Customs duty on salvaged vessel scrap upheld, with additional duty and canalising-agency charges sustained under the import scheme.

A salvaged vessel that had sunk in port and later vested in the Government was treated as wreck and scrap, so customs duty applied on the basis that such goods are deemed to be imported into India; the ocean-going vessel exemption did not protect a vessel subsequently broken up. The canalising agency's service charges were upheld because liability flowed from the import and disposal scheme through the authorised agency, not from proof of direct services to the petitioners. Additional duty under the Customs Tariff Act was also leviable because the true character of the imported article was scrap. Writ relief was declined where the petitioners had accepted the tender conditions and raised no timely objection.

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Issues: (i) Whether customs duty was payable on the salvaged wreck and scrap of a vessel which had sunk in port and later vested in the Government; (ii) whether service charges were validly payable to the canalising agency; (iii) whether additional duty under the Customs Tariff Act, 1975 was leviable; and (iv) whether the petitioners were entitled to writ relief in view of their acceptance of the tender conditions.

Issue (i): Whether customs duty was payable on the salvaged wreck and scrap of a vessel which had sunk in port and later vested in the Government.

Analysis: The vessel, after sinking and salvage, ceased to be an ocean-going conveyance and became goods in the nature of wreck and scrap. Goods including derelict, jetsam, flotsam and wreck brought or coming into India are to be dealt with as if imported into India under the Customs Act, 1962. The exemption for ocean-going vessels did not assist the petitioners because the proviso made subsequent breaking up chargeable to duty as if the vessel had been imported for breaking up.

Conclusion: Customs duty was payable and the contention of the petitioners failed.

Issue (ii): Whether service charges were validly payable to the canalising agency.

Analysis: The respondent corporation was shown to be the canalising agency under the relevant import policy for re-rollable scrap in the form of old ships and vessels for breaking. Liability to service charges did not depend on proof of direct services to the petitioners, but on the scheme of canalisation and disposal of the imported item through the authorised agency.

Conclusion: The demand for service charges was valid and the challenge failed.

Issue (iii): Whether additional duty under the Customs Tariff Act, 1975 was leviable.

Analysis: The description of the imported article as scrap attracted additional duty. The governing principle was that the true test is the nature of the goods imported, not the manner in which they came to be scrap. The additional duty provision therefore applied to the imported wreck and scrap.

Conclusion: Additional duty was leviable and the petitioners' objection was rejected.

Issue (iv): Whether the petitioners were entitled to writ relief in view of their acceptance of the tender conditions.

Analysis: The petitioners had participated in the tender process on terms that expressly required payment of customs duty and service charges, raised no timely objection, and sought to resile only after acceptance. In such circumstances, the Court declined to extend discretionary writ relief.

Conclusion: Writ relief was declined against the petitioners.

Final Conclusion: The challenge to the demands for customs duty, service charges, and additional duty was rejected, and the petition was dismissed with costs.

Ratio Decidendi: A wrecked vessel salvaged in port and sold as scrap is liable to customs duty as goods deemed to be imported, the statutory exemption for ocean-going vessels does not protect a vessel subsequently broken up, and liability to additional duty and canalising-agency charges follows the applicable import scheme and tender conditions.

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