Court rules loading goods on a ship post-clearance as export, entitling appellant to drawback allowance.

The court determined that goods should be treated as exported once loaded on a ship after clearance, entitling the appellant to drawback allowance under Section 75 of the Customs Act, 1962. The court rejected the argument that goods must physically cross India's territorial waters for export to be recognized, emphasizing that placing goods on a ship post-clearance constitutes export. Precedents and statutory provisions were considered, leading to the conclusion that the appellant's claim was valid. Orders disallowing the claim were set aside, and authorities were instructed to assess the claim accordingly.

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Issues Involved:
1. Determination of the stage at which goods can be treated as having been exported out of India for the purpose of drawback allowance claimable u/s 75 of the Customs Act, 1962.

Summary:

Issue 1: Determination of the stage at which goods can be treated as having been exported out of India for the purpose of drawback allowance claimable u/s 75 of the Customs Act, 1962.
The main issue in this appeal is the determination of the stage at which goods can be treated as having been exported out of India for the purpose of drawback allowance u/s 75 of the Customs Act, 1962. The appellant, a manufacturer of electrical accessories, had goods loaded on a ship that were later destroyed by fire and subsequently unloaded and scrapped. The claim for drawback was disallowed on the grounds that the goods had not crossed the territorial waters of India and hence could not be treated as exported. The learned single Judge upheld this view, stating that goods must go beyond the territorial waters of India to be considered exported.

The appellant contended that the export should be deemed complete once the goods are placed on the ship following clearance u/s 51 of the Act. The argument was that the term "India" should be read in context, meaning the landmass of the country, and not necessarily requiring the goods to cross the territorial waters.

The court examined various statutory provisions, including Section 2(18) defining "export," and Section 75 regarding drawback allowance. The court also considered the concept of territorial waters as defined in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976. It was noted that the sovereignty of India extends to the territorial waters, but the right of innocent passage for foreign ships through these waters is recognized.

The court referred to several precedents, including decisions from the Gujarat High Court and Kerala High Court, which held that the term "India" in the context of export and import refers to the landmass of the country and not the territorial waters. The court also noted that the Full Bench of the Bombay High Court had distinguished between the concepts of import and export, emphasizing that export duty is payable before goods are exported, whereas import duty is attracted once goods enter the territorial waters.

The court concluded that once goods are loaded on the ship after clearance u/s 51, they must be treated as exported for the purpose of Section 75. The appellant was thus entitled to the drawback allowance, and the orders rejecting the claim were set aside. The authorities were directed to determine the claim on merits. The court also rejected the oral application for leave to appeal to the Supreme Court, noting that the law on this question appeared to have been settled by several courts.

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