Customs duty taxable event on first entry into Indian territorial waters, not later re-entry after departure.

Customs duty was held to attach on the vessel's first entry into India's territorial waters, not on a later re-entry after it had left the port. The Court applied the ratio of the Full Bench decision, as followed by the subsequent Division Bench, and accepted that this precedent governed the controversy. It also noted that the facts were stronger for the respondent because the vessel had moved only between Indian ports with customs permission. The challenge to the relief granted below failed, and the appeal was dismissed with costs.

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Issues: Whether the taxable event for customs duty arose on the first entry of the vessel into the territorial waters of India or on its later re-entry after leaving the port, and whether the earlier Division Bench reasoning applied to uphold the relief granted by the Single Judge.

Analysis: The appeal challenged the relief granted on the basis of earlier Division Bench authority. The Court held that the ratio of the Full Bench decision, as correctly applied by the subsequent Division Bench, governed the controversy. It accepted that the relevant taxable event occurred when the vessel first entered the territorial waters of India, and not on the second entry after the vessel had left Bombay. The facts were treated as stronger for the respondent, since the vessel had moved only between Indian ports with customs permission.

Conclusion: The challenge failed. The Court upheld the relief granted below and dismissed the appeal, with costs.

Final Conclusion: The decision affirms that, in the circumstances considered, customs duty attached at the first entry into Indian territorial waters, and the appeal was rejected accordingly.

Ratio Decidendi: For customs purposes, the taxable event is attracted on the first entry of the vessel into the territorial waters of India, and not on a subsequent re-entry after departure, where the governing precedent so applies.

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