Ship stores compliance under Customs Act saved the importer from revocation and penalty for vessel supplies.

Ship stores supplied through the prescribed customs procedure, including a manual shipping bill and required endorsements, were treated as compliant where the goods were loaded on a foreign-going vessel and the records showed official for shipment. Section 89 of the Customs Act permits free export of ship stores in quantities determined by the proper officer having regard to vessel size, crew, passengers and voyage. On these facts, no deviation or Customs Act violation was established, and the DGFT notification relied upon was found inapplicable to the ship-store transaction. The revocation of permission and penalty were therefore unsustainable and were set aside.

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Issues: Whether the appellant, acting as a ship chandler, violated the Customs Act, 1962 by supplying masks as ship stores on a foreign-going vessel so as to justify revocation of permission and penalty under Section 117.

Analysis: The supply was made through the prescribed ship-store procedure, including filing of a manual shipping bill and obtaining endorsements at the relevant stages. The goods were loaded as stores on a foreign-going vessel for the Philippines Government, and the records showed that the authorities had allowed the shipment. Section 89 of the Customs Act, 1962 contemplates free export of stores in such quantities as the proper officer may determine having regard to the size of the vessel, crew, passengers, and voyage. On the facts, the appellant had followed the procedure and there was no established deviation or violation warranting penal action. The DGFT notification relied upon was held to be inapplicable to ship stores in the circumstances.

Conclusion: The revocation of permission and the penalty were unsustainable and were set aside in favour of the assessee.

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