Customs duty determined by statutory relevant date under Section 15, not by goods' entry date into territorial waters

SC allowed the appeals and set aside the HC judgment, holding that customs duty is payable with reference to the relevant date under Section 15 of the Customs Act rather than the date goods entered territorial waters. The court rejected the respondents' contention that a nil duty on the entry date under the Sea Customs Act notification precluded liability when goods were removed from warehouse later, clarifying that the taxable event and exemption must be determined by the statutory relevant date.

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Issues involved:
Levy of customs duty under the Sea Customs Act based on the exemption notification issued by the Central Government.

Analysis:
The judgment in question pertains to the challenge against a Full Bench judgment of the Bombay High Court regarding the levy of customs duty under the Sea Customs Act. The case revolved around goods entering India's territorial waters and being stored in a bonded warehouse, initially exempt from customs duty under a government notification. However, when the goods were to be removed from the warehouse, the exemption was rescinded. The respondents argued that as the goods were exempt from duty when they entered the territorial waters, no duty was payable upon removal from the warehouse. The Bombay High Court, relying on its previous decision, ruled in favor of the respondents, stating that no customs duty was payable.

The Supreme Court, in its analysis, referred to two of its prior decisions dealing with similar contentions. It clarified that the relevant date for determining the duty payable is when the bill of entry for the goods is presented under Section 46, or in the case of warehoused goods, the date of actual removal from the warehouse. The Court highlighted that the date of entry inwards and the date of arrival of the vessel into port are crucial for determining the levy of customs duty, not the date the ship entered territorial waters. The Court emphasized that the relevant date for fixing the duty rate is as per Section 15 of the Customs Act.

Based on the precedents and legal provisions, the Supreme Court concluded that the judgment under appeal did not correctly interpret the law. It held that duty must be paid with reference to the relevant date specified in the Customs Act. Consequently, the Court allowed the appeals and set aside the Bombay High Court judgment, leading to the dismissal of the writ petitions filed by the respondents. No costs were awarded in this matter.

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