Shankar Prasad Mitra, C.J.
1. This is an appeal from a judgment of Mr. Justice Sabyasachi Mukharji delivered on 3-9-1971 reported in 1973 Tax LR 2074 (Cal.) on an application under Article 226 of the Constitution. The appellant acted as Shipping Agents of Red Anchor Lines incorporated in Hong Kong, who at all material times were the owners of the motorship 'Nancy Dee'. The said vessel is registered at Hong Kong and sails under the British Flag.
2. Between January 4,1970 and February 23,1970, Transworld Marine Corporation was the Charterer of 'Nancy Dee' under a Charter-party Agreement between the said Corporation and its disponent owner Redfern Shipping Co. Ltd. for grain lightening operations.
3. 'Nancy Dee' arrived at the port of Paradip on January 4, 1970. The Everett Steamship Corporation, agents of the Charterer, engaged the vessel. The vessel was redelivered to the owners on February 23,1970.
4. On February 27, 1970 the vessel was taken on charter by the Yama-shita Shinnion Steamship Co. Ltd. whose Calcutta agent was Great Eastern Shipping Co. Ltd. Their Paradip agent was International Clearing and Shipping Agency. The vessel was ready for delivery to the next charterers, but the agents could not get port clearance from Customs authorities.
5. In these circumstances the appellant gave a Bank Guarantee of Rupees 50,000/- as security for payment of duty on stores and fuel if levied by the Customs authorities.
6. After the Bank Guarantee was furnished the port clearance war issued. The vessel was delivered on February 27,1970.
7. The appellants' case is that since 1966 the Government of India has been chartering Super Tankers with a draft of about 45 feet which the appellant has chosen to call 'Mother Vessels' for transporting massive quantities of wheat under PL-480 Aid. It was economical in terms of trade to arrange for the transport of foodgrains by Super Tankers. The Super Tankers, due to their deep draft requirements could not enter the ports for landing cargo directly on the wharf. The Super Tankers in those circumstances worked in moorings outside or within the harbour and discharged their grains into a number of small vessels for carriage of the grains to the destination ports which included the port of Calcutta. The cargo which the 'Mother Vessels' carried was transferred within the territorial waters into lightening vessels. These lightening vessels either discharged a part of cargo at the port where the lightening took place and proceeded to Calcutta or proceeded directly to Calcutta or such other destination as' the Government of India required. The lightening vessels have been described as 'Daughter Vessels'. The Cargo carried by the 'Daughter Vessels' was imported cargo and the 'Daughter Vessels', according to the appellant were performing the duties of the 'Mother Vessels'.
8. 'Nancy Dee' was one of those 'Daughter Vessels'. By the Charter Party Agreement it was provided that 'Nancy Dee' was to load cargo from the 'Mother Vessels' to its maximum safe draft and then at the instructions of the Charterer it would proceed to discharge the cargo in the manner indicated above.
9. Between January 4,1970 and February 23,1970, 'Nancy Dee' loaded cargo being grain and wheat from three Super Tankers 'Overseas Joyce', National Defender and 'Western Hunter'. These Super Tankers were the 'Mother Vessels' in Paradip and in Sandheads. After unloading cargo 'Nancy Dee' proceeded to Calcutta to discharge the cargo at the Kidderpore Docks.
10. In the premises the appellant's case is that 'Nancy Dee' was engaged as the 'Daughter Vessel' in the lightening operation from the 'Mother Vessels', namely Super Tankers during the said period and was actually engaged in the carriage of goods which the Super Tankers should have carried. The appellant contends that during the period commencing from January 4, 1970 and ending on February 23,1970, 'Nancy Dee' was a 'foreign going vessel' within the meaning of Section 2(21) of the Customs Act. 'Nancy Dee' was, therefore, exempt from payment of Customs duties on fuel and stores, received or consumed by the ship. The Customs authorities by two letters dated October 15,1970 and January 30,1971 demanded payment of duty in respect of stores which 'Nancy Dee' had consumed during the aforesaid period. The total claim of the Customs authorities was Rupees 36,090.09. In the application under Article 226 of the Constitution the propriety of these demands by the Customs authorities was challenged. Mr. Justice Sabyasachi Mukharji has dismissed the application.
11. Now Section 2(7) of the Customs Act defines 'coastal goods'. Coastal goods' means goods, other than imported goods, transported in a vessel from one port in India to another.
12. Section 2(21) of the Customs Act, which is vital for our purpose, defines 'foreign going vessel or aircraft'. It means inter alia any vessel or aircraft for the time being engaged in the carriage of goods or passengers between any, port or airport in India and any port or airport outside India, whether touching any intermediate port or airport in India or not.
13. Section 2(23) of the Act defines 'import'. 'Import' with its grammatical variations and cognate expressions, means bringing into India from a place outside India.
14. Section 2(33) of the said Act defines 'prohibited goods' which means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with.
15. Section 12 of the Customs Act deals with 'dutiable goods'. The duties of Customs shall be levied at such rates as may be specified under the Indian Tariff Act, 1934, or any other law for the time being in force, on goods imported into, or exported from, India.
16. We now come to Section 87 of the Act, which is as follows :-
'Imported stores may be consumed on board a foreign-going vessel or air craft. - Any imported stores on board a vessel or aircraft (other than stores to which Section 90 applies) may, without payment of duty, bexonsumed thereon as stores during the period such vessel or aircraft is a foreign going vessel or aircraft.'
17. Section 90 deals with concessions in respect of imported stores for the Navy.
We then come to Section 89. Section 89 prescribes :-
'Stores to be free of export duty. - Goods produced or manufactured in India-and required as stores on any foreign going vessel or aircraft may be exported free of duty in such quantities as the proper officer may determine, having regard to the size of the vessel or aircraft, the number of passengers and crew and the length of the voyage or journey on which the vessel or aircraft is about to depart.'
18. Against the background of the above provisions we have to determine the dispute between the parties in the instant appeal. We have already said that the Customs authorities had been demanding payment of duty in respect of stores which 'Nancy Dee' has consumed between January 4,1970 and February 25,1970.
19. Mr. A.K. Banerji, learned Counsel appearing for the respondents contends that 'Nancy Dee' was not a foreign going vessel within the meaning of Section 2(21) during the material period. At the relevant time she was carrying goods from one port i.e. Paradip, in India to another port in India i.e. Kidderpore Docks.
20. According to Mr. Banerji under Section 2(21) the character of the vessel for the time being is relevant and not the character of the goods. He says that although 'Nancy Dee' was flying a foreign flag she was for the time being engaged in carrying goods not between a port in India and a port outside India but solely within Indian Ports like Paradip or Sandheads to Kidderpore. Mr. Banerjee says further that a foreign going vessel in Section 2(21) must be engaged in carriage of goods between a port outside India and a port within India. It cannot mean two or more vessels or a series of vessels engaged in such carriage of goods. His principal contention is that the moment the goods were unloaded to 'Nancy Dee' from the Super Tankers the task of the Super Tanker was over and 'Nancy Dee' was carrying goods from a place or port in India to another port in India.
21. On the facts and in the circumstances of this case we are unable to accept the contentions of learned Counsel for the respondent. There are two conditions in Section 2(21). The first condition is that there must be carriage of goods or passengers between a foreign port and an Indian port. The second condition is that the vessel in question must be engaged in the carriage of such goods or passengers. There is no requirement that only one vessel must undertake the entire length of the journey from the foreign port to the Indian port for such carriage, of goods or passengers.
22. Under the scheme of the Act it seems to us, that there may be twokinds of shippings, viz., (1) coastal shippings and (2) foreign shippings. On the facts disclosed, it does not appear to us that this is a case of coastal shipping at all. 'Nancy Dee' was not required to have and did not have a licence for coastal trading vide : Appellant's solicitor's letter dated the 26th December, 1970 to the Assistant Collector of Customs, being Annexure B to the petition. The facts reveal that the Government of India had entered into only one contract for carriage of goods. There was only one principal which was carrying the goods. 'Nancy Dee' was an agent of the foreign principal. The entire journey from a foreign port to the port of destination in India was one journey for carriage of imported goods and 'Nancy Dee' took part towards the end in completing the journey. In other words, these Super Tankers were required to carry foodgrains from a foreign port to an Indian port, namely, either Paradip or Kidderpore Docks. The Super Tankers, by reason of their size and weight could not physically reach any of these ports. The Super Tankers waited outside the port although within Indian territorial waters. They unloaded their cargo to 'Nancy Dee' and 'Nancy Dee' carried the goods to the ports. The carriage of the goods by 'Nancy Dee' was merely a continuation of what the Super Tankers were required to do. There can be no doubt, on the facts of this case, that 'Nancy Dee' was engaged in the carriage of goods between a port outside India and a port in India, and as such, it was a foreign going vessel within the meaning of Section 2(21) during the period mentioned above.
23. In these premises, the demand of the Customs authorities for duty in respect of stores consumed by 'Nancy Dee' during the aforesaid period appears to us to be unreasonable. The demand letters dated October 15,1970 and January 30,1970 have, therefore, to be set aside.
24. In the result the appeal is allowed. The judgment and order under appeal are reversed and the rule nisi is made absolute.
25. Let a Writ in the nature of Mandamus be issued calling upon the respondents and each of them to forthwith cancel or rescind the demand orders dated October 15,1970 and January 30,1971. The appellants are released from their guarantee. Money lying with the Customs authorities under order of this Court dated the 26th February, 1971, is to be refunded to the appellant. Prayer for interim stay is refused.
26. There will be no order as to costs.
Salil Kumar Dutta, J.
27. I agree.