Customs duty attaches on actual unloading of imported goods, not on entry into territorial waters.

Customs duty on imported goods becomes chargeable on actual unloading of the goods into India, not when the vessel merely enters territorial waters or berths. The Madras HC rejected the territorial-waters test and treated unloading as the decisive point for levy. Because the actual unloading date was not established, the applicable duty depended on whether unloading occurred on 4-1-1979, when the earlier assessment would stand, or on 5-1-1979 or later, when the reassessment had to take the exemption notifications into account.

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Issues: Whether customs duty on imported goods became leviable on the date the ship entered territorial waters, on the date of berthing, or only on the date of actual unloading of the goods.

Analysis: The governing principle applied was that import duty is attracted when the goods are unloaded and brought into the mass of goods in India, not merely when the vessel enters territorial waters. Earlier exemption notifications had expired before 1-1-1979, and fresh notifications came into force only on 5-1-1979. Since the actual date of unloading was not established, the correct levy depended on whether unloading took place on 4-1-1979 or on 5-1-1979 or later.

Conclusion: The relevant date for chargeability is the date of actual unloading of the goods. If unloading occurred on 4-1-1979, the assessment already made would stand. If unloading occurred on 5-1-1979 or later, the duty had to be reassessed in the light of the exemption notifications.

Final Conclusion: The appellate court rejected the territorial-waters test, affirmed unloading as the decisive point for levy, and issued consequential directions for fresh consideration depending on the actual date of unloading.

Ratio Decidendi: For imported goods, customs duty becomes chargeable on actual unloading, not on entry of the vessel into territorial waters.

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