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V.M. Salgaocar and Brother Pvt. Ltd. and Others Vs. K.C. Lahiri, Assistant Collector of Customs and Central Excise, Marmagoa and Others - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtMumbai High Court
Decided On
Case NumberS.C.A. (W.P.) Nos. 2, 9, 71 of 1972, 102/73, 16, 17 of 1975, No. 72 of 1976
Judge
Reported in1982(10)ELT322(Bom)
ActsCustoms Act, 1962 - Sections 2(21)
AppellantV.M. Salgaocar and Brother Pvt. Ltd. and Others
RespondentK.C. Lahiri, Assistant Collector of Customs and Central Excise, Marmagoa and Others
Excerpt:
- - in many respects this structure was shaped like a ship. there a gas float shaped like a boat but not intended or fitted to be navigated, was held not be a ship. his lordship observed :this structure (sliedrecht) in some respects is like the gas float and in other aspects it is like the floating crane. it was meant to be used in other ports in india including madras and kandla and also at other international ports in foreign countries like singapore......petitioners to file the bills of entry for the purpose of levy of customs duty in respect of three transhippers and spares for two of them. the three transhippers are 'sanjeevani', 'gosalia prospect' and 'priyadarshini'. petitions nos. 2 and 9/1972 are in respect of sanjeevani and gosalia prospect. petitions nos. 102/73, 16 and 17/1975 and 72/1976 are filed in respect of spares for these two transhippers and petition no. 71/1972 is in respect of priyadarshini.2. the case of the petitioners is as follows :-the petitioners are the owners of the transhippers. sanjeevani and gosalia prospect were second hand sea going vessels at the time they were purchased by the petitioners. they were thereafter fitted up with equipment for transhipping mining ore from barges or from its holes to bigger.....
Judgment:

1. These are seven writ petitions challenging the letters, decision and Orders of the Customs Authority requiring the petitioners to file the bills of entry for the purpose of levy of customs duty in respect of three transhippers and spares for two of them. The three transhippers are 'Sanjeevani', 'Gosalia Prospect' and 'Priyadarshini'. Petitions Nos. 2 and 9/1972 are in respect of Sanjeevani and Gosalia Prospect. Petitions Nos. 102/73, 16 and 17/1975 and 72/1976 are filed in respect of spares for these two transhippers and Petition No. 71/1972 is in respect of Priyadarshini.

2. The case of the Petitioners is as follows :-

The petitioners are the owners of the Transhippers. Sanjeevani and Gosalia Prospect were second hand sea going vessels at the time they were purchased by the petitioners. They were thereafter fitted up with equipment for transhipping mining ore from barges or from its holes to bigger iron ore carriers. Priyadarshini is a sea going vessel also used from the inception for transhipping iron ore. The three transhippers are not inland vessels within the meaning of the Indian Steam Vessels Act, 1917. They are sea going or in other words ocean going vessels within the meaning of the Government of India, Ministry of Finance (Department of Revenue) Notification No. 262-Customs dated 11th October, 1958 which exempts ocean going vessels from payment of customs duty leviable thereon.

3. When the Transhippers were brought into India, the respondents required the petitioners to file a bill of entry for the purpose of payment of customs duty. The petitioners contended that the Transhippers were exempted from customs duty and declined to file bill of entries. As the respondents insisted in the filing of bill of entry for the purpose of levying customs duty, the petitioners filed various proceedings and eventually came to this Court with the first three Writ Petitions.

4. The remaining four Writ Petitions were filed on the ground that spare parts for ocean going vessels were also exempted from duty.

5. The case of the respondents is as follows :-

The Transhippers are neither vessels nor are they ocean going. They are therefore liable to pay customs duty. Consequently the spares required for the Transhippers were also liable to pay customs duty.

6. The two issues that arise before me are :

(1) Whether the Transhippers are vessels; and

(2) In case they are vessels, whether they are ocean going vessels.

7. On the first issue it is contended by the respondents that the Transhippers are floating docks and are therefore goods within the meaning of the Customs Act. I am unable to agree with the contention of the respondents. It cannot be gainsaid that the Transhippers are vessels as defined under section 3(63) of the General Clauses Act which provides that vessels shall include any ship or boat or any other description of vessel used in navigation. To navigate is to move on water.

8. It is argued by the respondents that the Transhippers are not used for navigation because they are stationary and are used only for the purpose of transshipping ore from barges to iron ore carriers. It cannot be gainsaid that the Transhippers move from one place to another on the sea and go from inland waters to the sea and vice versa.

9. As to Sanjeevani and Gosalia Prospect, who were self propelled, the question was decided by the Bombay High Court in Misc. Petition No. 496/1970 Chowgule Pvt. Ltd. vs. Union of India and others wherein the question as to whether the Maratha Transhipper, which was self propelled and was similar to Sanjeevani and Gosalia Prospect, came up for consideration and the Court held that they were vessels. I respectfully agree with the reasoning of the High Court of Bombay and adopt it to the present case.

10. In the case of Priyadarshini, the contention of the respondents that this Transhipper was not a vessel was based on the fact that Priyadarshini was not self propelled. Similar questions arose in various English decisions which I shall presently consider.

11. In the case of 'The Mac' (1882) 7 P.D. 126 a barge which was not furnished with any means by which she could be propelled, and was used for dredging purposes was held to be a ship, within the meaning of the Merchants Shipping Act, 1854. Coleridge C.J. observed :- 'I think it immaterial to consider whether the hopper barge was used in navigation within the meaning of Merchants Shipping Act, 1854, section 2, because that enactment directs that the word 'ship' shall include every description of vessel used in navigation not propelled by oars. I do not exclude other meanings of the word. I agree that to hold that a mud barge is a ship may seem to go very far in the way of interpretation. But we must not overlook the conclusions of holding that the hopper barge is not a ship'. Lord Coleridge, C.J. disagrees with the Court below and states : 'The Court below fails to deal with the question whether the hopper barge may not be considered a ship in the ordinary popular sense of the word. I decide that the barge is a ship in the common meaning of that term' and Lord Brett C.J. and Cotton L.J.J. concurred with him. Brett C.J. in his judgment observed : 'In this case the vessel, if she may be so called, was built for a particular purpose. She was built as a hopper barge; she has no motive power, no means of propulsion within herself. Towing along will not conduct her. She must have a rudder and therefore she must have men on board to steer her. Barges are vessels in a certain sense; and as the word 'ship' is not used in a strictly nautical meaning, but is used in a particular popular meaning, I think this hopper barge is a ship'.

12. In 'The Mudlark' (1911) P. 116 the Court held, following the case of 'The Mac', that the hopper barge, used for dredging purposes with a rudder but without means of propulsion and when underway towed to and from her destination, is a ship within the meaning of the Merchants Shipping Act. The contention for the respondents was that there is no decision, under the Merchants Shipping Act, 1894 that the hopper barge without the means of propulsion, and employed for dredging only, is a ship for the purpose of limitation of liability. Bargrave Deane J. who rendered the judgment said : 'I think I am bound to follow the case of 'The Mac' and hold that 'the Mudlark' is a ship'.

13. In 'The Harlow' it was held that the barges which were fitted with rudders and were not propelled by oars were ships.

14. In Messrs. Swan, Hunter & Wigham Richardson Ltd. ('Titan') v. Benwood and others 1923 14 Ll.L. Rep. 484 the floating crane Titan was held to be a ship under the Merchants Shipping Act. In this case however, the claim was unopposed.

15. In St. Machar (Lloyd's List Reporter Vol. 65-125) Lord Carmond while disposing of the contention that the 'Gwienthills' was not a vessel said : 'I am of the opinion that the Gwienthills was being used in navigation at the time the collision took place. She was water bound at the time and I cannot deny to her the character of a vessel, merely because she was not capable of self propulsion, as was suggested, because she was incapable of self direction on the assumption that she had no rudder'. Lord Fleming and Lord Moncrieff concurred with Lord Carmond in Cook v. Dredging and Construction Company Ltd. (Lloyd's List Reporter 1958 Vol. 1). The question was whether the 'Sliedrecht IX' was a vessel. Sledge was pumped from barges loaded with it through a pipeline to shore by Sliedrecht IX. The defendant denied that Sliedrecht IX was a ship and contended that she was a floating pump which was permanently fixed to a pipeline for the purpose of discharging dredge material into a shore area. She was permanently fixed to the pipeline from July 18, 1950 until November 10, 1951. The question arose whether the structure (Sliedrecht IX) was a ship as the plaintiffs say or a floating pump as the defendants say. Justice Jones observed : 'The definition of a ship is a vessel. A ship includes every description of vessel used in navigation not propelled by oars. In many respects this structure was shaped like a ship. It had a deck and hatches, companion ladders and other equipment characteristic of a ship, but it was flat bottomed, it was similarly shaped at each end and had no rudder or means of propulsion. It seems easy to decide that it was a vessel, but less easy to say that it was used in navigation. At the time of the plaintiff's accident it was being used in process of dredging and land reclamation. It was described by the defendant as a 'reclamation dredger'. It was not used to bring anything up from the bed of a Harbour, channel or river. This sludge was not transferred to the structure, but an engine on it forces this sludge from the barge through a pipeline that ran on wooden supporters from the place where the structure was moored to the shore where it was discharged and used for the purpose of reclamation of land. The structure had been moored in this place for 18 months before the day of the plaintiff's accident but it was not kept permanently in any place. It was moved by tow from time to time to any place where it was required. It had travelled a considerable distance. Since the accident it had been as far as Aden and before the accident it had, at any rate, been brought over from Holland, whatever other journeys by sea it may have performed'. In the case of the 'Sliedrecht IX' his Lordship considered the cases of 'The Mac', 'The Mudlark', 'The Harlow' and it was observed that these barges were apparently moved about much more often than Sliedrecht IX would be moved about. The case of Messrs. Swan, Hunter & Wigham Richardson Ltd. ('Titan') v. Benwood and others was also mentioned. For the opposite side the case of Wells and another v. The Gas Float Whitten No. 2 (Owners), [1897] A.C. 337, was cited. There a gas float shaped like a boat but not intended or fitted to be navigated, was held not be a ship. His Lordship observed : 'This structure (Sliedrecht) in some respects is like the gas float and in other aspects it is like the floating crane. I think that it should be held that it was used in navigation, as it had been moved often on the sea from place to place as occasion required, and that it should be held to be a ship.'

16. The cases considered by me above lead me to the definite conclusion that all the transhippers including Priyadarshini are ships and therefore vessels.

17. It was strenuously contended before me by Shri Baptista, learned counsel for the respondents that the act of navigation pre-supposes a self propelling contrivance and that a vessel towed by another is not capable of navigation and therefore not used in navigation. In view of the rulings discussed by me this contention must be rejected.

18. I shall now come to the second question, namely whether the said three vessels were sea going vessels.

19. Section 3(41) defines 'sea going' in relation to a vessel as meaning a vessel proceeding to sea beyond inland waters or beyond waters declared to be smooth or partially smooth waters by Central Government by Notification in the official Gazette. It is evident from this definition that the line demarcating or separating the inland waters from the sea is important for the purpose of classifying vessels as sea going or not sea going.

20. A feeble attempt was made by Shri Baptista, learned counsel for the respondents to distinguish between 'sea going' and 'ocean going' vessels, but the argument was not pressed. In fact, such a distinction could be based only if a demarcating line could be drawn between an ocean and the sea and if in fact there had been any clear difference between an ocean and a sea. An ocean is a vast expanse of water which includes the water mass building into the land mass. An ocean includes sea. Had it not been so a foreign going vessel crossing the Arabian sea from India to Africa would be only a sea going vessel, whereas a vessel voyaging off the course of Ceylon would be an ocean going vessel. 'Deep Sea' and 'open sea' were other phrases used by Shri Baptista in his attempt to draw a distinction between sea going and ocean going vessels. The Merchants Shipping Act makes no difference between sea going vessels and ocean going vessels. No separate definition is given of ocean going vessels. Sea going and ocean going vessels are grouped together under the generic name of sea going vessels, in clause 41 of section 3 of the Act. Under the Customs Act, 1962 also no distinction is made between a sea going vessel and an ocean going vessel. The question as to whether a vessel is a sea going vessel or an ocean going vessel, is not relevant for the purpose of Customs Act. Section 2(21) of the Customs Act defines only foreign going vessels.

21. Vessels engaged in coastal trade are considered as sea going vessels and as such exempted under the Notification of October 11, 1958. This point was not disputed by the respondents. This is a clear indication that any vessel that navigates beyond the inland waters is sea going or an ocean going vessels. The expression 'ocean going' is defined in Webster's Law Dictionary as follows : 'Ocean going = relating to or suitable for travel in the ocean'.

22. There are various other characteristics of all the Transhippers including the Priyadarshini which indicate that the Transhippers are ocean going vessels. I shall presently consider them.

23. The Transhippers were acquired in accordance with the terms and conditions agreed by the Government of India. On arrival to India of the Transhippers, the owners filed Ships Cargo Manifesto, Ships Stores Manifesto, Private Property List and the last Port Clearance on Board the Transhippers and complied with all the other formalities required to be ordinarily complied with when ocean going or sea going transhippers enter Ports or arrive in India. It was informed to the respondents that the Transhippers would be used in Mormugao Harbour during fair season and that for the remaining period they would navigate to and be used for transshipping at one or other of the Indian Ports including Madras, Kandla, Bombay or at other international ports including Singapore. The Merchantile Marine Department, Bombay approved the names to be given to the Transhippers. Official numbers were allotted to them.

24. The Priyadarshini was towed from Japan to Marmagoa. It was to be used during monsoon in other Ports including Singapore. The licence for that purpose was obtained. It was meant to be used in other ports in India including Madras and Kandla and also at other international ports in foreign countries like Singapore. It was meant to be used in the open sea and for that reason it was registered under section 34 of the Act and was licensed under section 406 under the Act. Later on however, the registration and the licence were cancelled because sections 34 and 406 of the Act applies only to sea going ships fitted with mechanical means of propulsion. However the granting of the registration and the licence by the Director General of Shipping who is a specialised Department in shipping matters indicates that Priyadarshini had the characteristics of a vessel though it was not self propelled.

25. The Transhippers are manned by officers possessing certificates of competency issued under the Act. These certificates are required only for officers to be employed in sea going or home trade vessels. The transhippers are equipped with radio telegraphy, rudder and signalling equipment which is required to be fitted only to sea going vessels. The transhippers are also equipped with safety fire fighting and life saving equipment which are required only for sea going vessels. They have been allotted by appropriate Agencies of the Government of India an international call signs, which signs also are allotted only to vessels plying on high seas and are not allotted to inland vessels. The Asst. Wireless Adviser to the Government of India granted to the ship a Maritime Mobile Station licence which bears the No. .000218. The Transhippers have crew accommodation as required for sea going vessels.

26. From the certificate of Indian Registry issued by the Directorate General of Shipping the Priyadarshini has one deck, two masts, 5 bulk heads. Its depth in hold from tonnage deck to ceiling amid ship is 20.60 metres. Its depth from top of upper deck at side amid ship to bottom of keel, 1.03 metres, length from forepart of stem to the side of the head of the stern post 107.60 metres, main breadth to outside of plating 32.10 metres, gross tonnage 2047.83 tons and registered tonnage 1803.38 tons.

27. The respondents had not required the vessels imported or employed for lightening purposes wholly within the Harbour limits to file a Bill of Entry, 'Varuna Duti', owned by Thakur Trading Company, 'Maratha Explorer', 'Samudra Vijay' and 'Samudra Jeet' all owned by Pentocean S.S. Co. and 'Apj Rita' owned by A.P.J. Lines are some of such vessels from whom the respondents did not require the filing of the Bill of Entry even though the vessels were exclusively employed in lightening wholly within the Harbour borders at Bombay or Madras. The answer of the respondents in this regard is a bald denial that those vessels were similarly situated to the Transhippers. In my opinion for the purpose relevant to the question that I am discussing, the said vessels were in fact similarly situated to the Transhippers and I had no hesitation in holding that the said vessels were not required to file a Bill of Entry because they were considered to be sea going vessels.

28. It cannot be gainsaid that the Transhippers navigate in open sea as distinguished from inland waters and that they move from place to place in the sea and thereafter lie in open anchorage for loading various ore carriers of bigger tonnage. They are therefore sea going vessels and are exempted from paying customs duty and from filing bills of entry.

29. I now come to the question of Writ Petitions Nos. 102/73, 16 and 17/1975 and 17/1976 which deal with spare parts imported by the petitioners. The case of the petitioners is that they imported the goods for transhipment; that they wanted to pass on the goods to the Sanjeevani and Gosalia Prospect for whom the spares had been brought and that therefore the Import (Control) Order was not attracted. They state that the two vessels are Foreign going vessels. They further contend that they had obtained specific permission from the Government of India for importing the said spares and that the Reserve Bank of India had also released to them the necessary foreign exchange. They state that in view of these permissions obtained from the Government of India and the Reserve Bank, they had substantially complied with the provisions requiring the petitioners to obtain an import licence for the said spares. Therefore, they conclude, they were not required to obtain an important licence.

30. The contention of the respondents is that in the present case there was no transhipment and that therefore Clause 11(1)(d) of the Import (Control) Order, 1955 was not applicable.

31. I agree with the respondents. The two Transhippers are not foreign going vessels because at the relevant time they were not engaged in carrying goods or passengers between any port in India and any port outside India. I am also unable to agree with the argument of the petitioners that by obtaining specific permission from the Government of India for importing the spares and by obtaining the release by the Reserve Bank of India of the necessary foreign exchange, they had substantially complied with the provisions of law requiring them to obtain an import licence.

32. In the result Writ Petitions Nos. 2 of 1972, 9 of 1972 and 71 of 1972 are allowed and the prayers therein are granted. Writ Petitions Nos. 102 of 1973, 16 and 17 of 1975 and 72 of 1976 are dismissed. There shall be no order as to costs.


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