UNION OF INDIA AND ORS. versus JALYAN UDYOG AND ANR.

Citation: [1993] SUPP. 2 S.C.R. 293 · Decided: 14-09-1993 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Appeal(s) allowed

Judgment (excerpt)

UNION OF INDIA AND ORS. 
v. 
JAL YAN UDYOG AND ANR. 
SEPTEMBER 14, 1993 
[B.P. JEEVAN REDDY AND S.P. BHARUCHA, JJ.] 
Customs Act, 196~Section 25(2) read with section 15 and Central 
Government Notification No. 262-Cus. dated October II, 1958 (as amended 
vide Notification No. 163-Cus. dated October 16, 1965)-The point in time 
A 
B 
at which the exemption from payment of any customs duty is deemed to have C 
stood revoked if the ship imported into India is subsequently broken up for 
recovery of scrap-metal detennination of-Whether the rate of duty shall relate 
to the date of such revocation and the then valuation of the ship. 
Sub-section (2) of Section 25 of the Customs Act, 1962 empowers the 
Central Government to exempt any goods on which customs duty is liable, D 
from duty if certain specified conditions are met. And section 15 of the Act 
specifies three different points of time with reference to which the rate of 
duty and tariff valuation of imported goods (as defined vide clause (25) of 
Section 2 of the Act) is to be determined under different situations. On 
October 11, 1958, under Section 25 of the Act, the Central Government E 
issued an exemption Notification No. 262-Cus. which was later amended 
vide Notification No. 163-Cus. dated October 16, 1965. The proviso to these 
Notifications stated that if the ship on the import of which payment of 
customs duty had been earlier exempted, is subsequently broken 
up/scrapped, the duty shall be levied as if it were imported to be broken 
F 
up. 
2. On March 1, 1984 the Collector of Customs, Bombay issued a 
public notice prescribing, inter alia, that tariff valuation of India Fla~ 
Vessels cleared by the Director General of Shipping for breaking up/scrap-
ping will be on the basis of the prevalent import-prices of similar vessels G 
imported by the Metal Scrap Trading Corporation Limited, Calcutta for 
the purpose of scrapping "during the period of sale". 
The Shipping Corporation of India had purchased from abroad two 
ocean-going vessels which arrived at the Bombay Port on August 14, 1968. 
In 1980 these were sold to a Private Limited who after operating these for H 
293 
294 
SUPREME COURT REPORTS [1993] SUPP. 2 S.C.R. 
A 
some time, sold them in 1982 to an other Shipping Company. The latter 
in August 1983 sought the permission of the Director General of Shipping 
for breaking up of these ships. Permission was accorded on October 1, 
1983. These ships were sold to the respondent company viz. M/s Jalyan 
Udyog on September 12, 1984. 
B 
c 
The last vendor & vendee represented to the Customs Authorities 
that for reasons advanced by them the above-mentioned public notice 
could not be applied to these two ships. Upon not receiving a favourable 
response, they filed a writ petition before the High Court; a Division Bench 
allowed the petition and directed that the value of the ships be determined 
with reference to the year in which these were imported. However, another 
Division Bench adjudicating upon a batch of writ petitions, distinguished 
the decision in Jalyan Udyog on the ground that one of the points in time 
specified in section 15 of the Act, i.e. the date of Bill of Entry in respect of 
the ship, was available for the ships to which the said batch of petitions 
D pertained whereas Bill of Entry was never filed in Jalyan Udyog. In the 
result, these petitions were dismissed. Aggrieved by the above decisions, 
the Union of India and the ship owners filed Civil Appeals/Special Leave 
Petition before this Court. 
The ship-owners contended, inter alia, that fiction cannot create two 
E 
separate points of time for import into India of the name integrated item, 
i.e. one for the ship, and second for the metal-scrap to which the ship may 
be converted-for determining tariff valuation and the rate of customs 
duty, viz. the year 1968 for the ship and the year 1983 for the said metal 
scrap, and that the power granted by section 25 of the Act cannot bestow 
F 
upon the executive the power to create a fictional time-dimension under 
section 15 of the Act, because such creation would necessitate a second 
fiction as to the time which would be more meaningful from amongst the 
several dates namely whether it should be the date of last voyage of the 
ship in question or the date of actual breaking-up of the ship or the date 
on which the Director General of Shipping grants permission to break-up, 
G etc. The Union of India contended that the said Notification

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