1999 (10) TMI 82 - SC - Customs

Supreme Court: No Duty Drawback for Cargo Sunk in Indian Waters

The Supreme Court ruled that cargo sinking within Indian territorial waters did not qualify for duty drawback under the Customs and Central Excise Duties ... Drawback - export - taking out of India to a place outside India - territorial waters - high seas - goods manufactured in India and exportedExport - taking out of India to a place outside India - territorial waters - drawback - Whether duty drawback under the Customs and Central Excise Duties Drawback Rules, 1971 is payable where goods loaded for export are destroyed when the vessel sinks within the territorial waters of India. - HELD THAT: - The Rules make drawback available only to 'goods manufactured in India and exported,' and define 'export' as 'taking out of India to a place outside India.' The Court adopted the territorial waters test: an export is completed when the goods are moved outside the territorial waters of India. Reliance was placed on Collector of Customs, Calcutta v. Sun Industries , where this Court held that goods loaded and carried beyond territorial waters (to the high seas) were 'taken out of India' and thus exported. Applying that principle, the Court found that where the vessel sank and the cargo was destroyed while still within India's territorial waters, the goods were not taken out of India to a place outside India and therefore no export, as defined in the Rules, had occurred. Consequently, claim for drawback failed. [Paras 3, 4, 5]No duty drawback is payable because the goods were destroyed within territorial waters and were not 'taken out of India to a place outside India.'Final Conclusion: The appeal is allowed; the shipment that was destroyed within India's territorial waters did not amount to an export under the Drawback Rules and no duty drawback is payable. No order as to costs. Issues: Duty drawback eligibility for destroyed cargo loaded for export.The Supreme Court held that the cargo loaded by the respondents, which sank within the territorial waters of India, did not qualify as an export under the Customs and Central Excise Duties Drawback Rules, 1971. The Court emphasized that for an export to occur, the goods must be taken out of India to a place outside India, beyond the territorial waters. Referring to a previous judgment, the Court clarified that high seas outside territorial waters would also qualify as a place outside India. Since the cargo was destroyed within Indian waters, no duty drawback was available. The civil appeal was allowed, and no costs were awarded.