Vessel can’t be made amenable to Customs Duty Nine years later by virtue of condition in another Exemption Notification: Orissa High Court [Read Judgment]

The Orissa High Court held that the vessel cannot be made amenable to Custom duty nine years later by virtue of condition in another exemption notification.

The petitioner Great Eastern Shipping Company Ltd. is a private sector shipping service provider involved in the transportation of crude oil, petroleum products, gas, and dry bulk commodities. It is stated to be a member of the Indian National Ship Owners Association (INSA).

The Petitioner acquired from Panama, a motor ship, ‘Jag Arnav’. In terms of Section 406 of the Merchant Shipping Act, 1958 (MS Act), a general license for ‘Jag Arnav’ to undertake worldwide trade and coastal trade in Indian waters was obtained by Petitioner. ‘Jag Arnav’ arrived at Paradeep Port, Orissa on 30th April 2003 for the first time. At that relevant time, the import of a foreign going vessel was exempt from customs duty in terms of Serial No.352 of Notification No.21/2002-Cus, dated 1st March 2002 as amended, read with the relevant tariff heading under the Central Excise Tax. The said Entry 352 read as follows: “Heading 8901: All goods (excluding vessels and other floating structures as are imported for breaking up).”

Mr. Rohan Shah, the counsel on behalf of the petitioner raised the issue of whether the customs authorities are entitled to assess the imported vessel to duty, on the premise that the bill of entry is filed in the year 2018, and also collect duties and tax prevalent in 2018 despite the fact that the vessel was admittedly imported into the Indian waters on 28th May 2012 more particularly when the customs duty applicable at that point of time was ‘nil’.

The division bench of Chief Justice ​​Dr. S. Muralidhar and Justice B.P. Routray ruled that since vessel ‘Jag Arnav’ called in Indian port for the first time at Paradeep on 30th April 2003, and at that relevant date it was exempt from payment of customs duty it cannot be made amenable to such duty nine years later by virtue of a condition in another exemption notification of March 2012.

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Great Eastern Shipping Company Ltd. and another vs Union of India and others , 2021 TAXSCAN (HC) 557 , Mr. Rohan Shah, Mr. S. Mohanty , Mr. P.K. Parhi & Mr. S.C. Mohanty