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PETITIONER: COLLECTOR OF CUSTOMS. CALCUTTA

       Vs.

RESPONDENT: SUN INDUSTRIES

DATE OF JUDGMENT11/04/1988

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RANGNATHAN, S.

CITATION:  1988 SCR  (3) 500        1988 SCC  Supl.  342  JT 1988 (2)   131        1988 SCALE  (1)758

ACT:      Customs Act,  1962/Customs and  Central  Excise  Duties Drawback  Rules,  1971.  Sections  2(8)  and  75/Rule  2(c)- Drawback on  imported material  used in manufacture of goods exported-Goods reached  a ’place  outside  India’  if  goods reached a place beyond the territorial waters.      Words and Phrases. ’Place’-Meaning of.

HEADNOTE:      The Respondent  had  shipped  plywood  panels  for  tea chests to  be delivered  at Colombo under claim for drawback under Section  75 of the Customs Act, 1962, against shipping bill. The  ship developed  engine trouble  on  the  way  and returned back  and ran  aground in Indian territorial waters at the  port of  Paradeep. The  fitting,  stores  and  cargo vessel had been salvaged into India under the supervision of Port Trust Paradeep.      Respondent claimed  drawback on  the  said  goods.  The claim was  rejected by the Assistant Collector under Section 75 of  the Customs Act read with Section 2(18) and rule 2(c) of the  Customs and  Central Excise  Duties Drawback  Rules, 1971. On  appeal, the  Appellate Collector also rejected the claim  on   the  ground  that  the  ship  ran  a  ground  in territorial waters of India, and so the said goods could not be deemed to have been exported.      A Revision  Petition preferred under Section 131 by the Respondent was  transferred to  the Customs  Excise and Gold (Control) Appellate  Tribunal. The  Tribunal found  that the ship had  passed beyond  the territorial waters of India and the engine  trouble developed while the ship was in the high seas and,  thus, by  reason of the ship having passed beyond territorial waters  with the  goods on  board, the export of the goods out of India had been completed; that subsequently the ship  decided to sail into the territorial waters was of no relevance,  and held  that under the scheme of Section 75 of the  Act, export  having been  completed, Respondent  was entitled to the benefit of the drawback scheme. 501      In the appeal by Revenue, under section 130-E(B) it was contended that  proof must  be  given  that  the  goods  had reached a  place outside  India in view of section 2(18) and that taking  out to  a place outside India meant delivery of

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goods to a place outside India.      Rejecting the appeal, this Court, ^      HELD: 1.1  The Tribunal  was right  in the view it took that the  Respondent was  entitled to the benefit of section 75 of the Customs Act. [506B]      1.2 When  the ship  got clearance  and moved out of the territorial waters the export was complete. The title to the goods passed  to the exporters. The goods reached a place in the high  seas which  is outside  India and the title of the goods also  passed to  the purchasers.  It is  true that the goods did not land in any place because of the defect in the ship. But  the expression  "taking out  to a  place  outside India" would  also mean  a place  in high seas. It is beyond the territorial waters of India. High seas would also mean a place outside  India, if it is beyond the territorial waters of India. Indubitably the goods has been taken out of India. [505B-C, D]      Lucas TVS v. Assistant Collector, [1987] vol. 28 E.L.T. 266, referred to.      2.2 The  word "place" is generally found in conjunction with other  words which  give it  a colour,  and is  usually controlled by its context. [505H]      2.2 In  the clause of charter party requiring charterer to procure  safe "place"  for discharge  of cargo,  it meant spot selected  to drop  anchor plus  area over  which tanker might swing  on tide  and charter’s  duty was  not fulfilled merely by  selecting area  containing both  safe and  unsafe berths. [505F-G]      2.3 The  word "place"  as used in a statute relating to searching for  stolen goods  in any store, shop, wherehouse, or other  building or place in a town, includes a steam-boat or vessel moored at the wharf. [505G]      Webster Comprehensive Dictionary, International Edition page 964,  Words and Phrases, Permanent Edition, Volume 32-A page 128, Stroud’s Judicial Dictionary, 3rd Edition, Vol. 3, pp 2199, 2208, referred to 502

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 761 of 1988.      From the  Order dated  14.7.1987 of  the Customs Excise and Gold  (Control) Appellate  Tribunal, New Delhi in Appeal No. 2139/81-D.      A.K. Ganguli,  Ms. Indu  Malhotra and  Mrs. Sushma Suri for the Appellant.      The Judgment of the Court was delivered by      SABYASACHI MUKHARJI,  J. This  appeal under section 130 E(b) of  the Customs  Act, 1962 (hereafter called ’the Act’) directed against  the order  dated 14th of July, 1987 of the Customs  Excise   and  Gold   (Control)  Appellate  Tribunal (hereinafter called  ’CEGAT’). By  the  impugned  order  the Tribunal allowed the appeal of the respondent.      On 7th June, 1980 the respondent M/s. Sun Industries of Calcutta had  shipped 6000  bundles containing 1,00,000 sets of plywood panels for tea chests on the M.V. Mohur Gang. The shipment of  the said  goods was  intended for  delivery  at Colombo under  claim for  drawback on  the said  goods under section 75  of the  Act against shipping bill. On 20th June, 1980 on  proceeding to  the vogage  after  shipment  of  the goods, the  ship developed  engine trouble  on the  way  and returned back  and ran  aground in Indian territorial waters

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at the port of Paradeep. The fitting stores and cargo vessel had been  salvaged into  India under the supervision of Port Trust  Paradeep.   The  respondent  thereafter  applied  for drawback under section 75 of the Act. By an order dated 25th October, 1986,  the Assistant  Collector of Customs rejected the claim for drawback on the said goods under section 75 of the Act read with section 2(18) and rule 2(c) of the Customs and  Central  Excise  Duties  Drawback  Rules,  1971.  Being dissatisfied  the   respondent  appealed  to  the  Appellate Collector of  Customs, Calcutta.  By the  order  dated  12th February, 1981  the Appellate  Collector rejected the appeal holding that  the ship  ran aground in territorial waters of India, therefore, the said goods could not be deemed to have been  exported.   Dissatisfied  with   the  said  order  the respondent preferred  a revision  under section  131 of  the Act. The revision petition was thereafter transferred to the Customs Excise  and Gold  (Control) Appellate  Tribunal, New Delhi.      Section 75  of the  Act provides  drawback on  imported materials 503 used in  the manufacture  of goods  which are  exported. The said section reads as follows:           "75(1) Where  it appears to the Central Government           that  in   respect  of   goods  of  any  class  or           description manufactured  in  India,  being  goods           which have  been entered for export and in respect           of which  an order  permitting the  clearance  and           loading thereof  for  exportation  has  been  made           under section  51 by  the proper officer, or being           goods entered  for export by post under section 82           and  in  respect  of  which  an  order  permitting           clearance for  exportation has  been made  by  the           proper officer  a drawback  should be  allowed  of           duties of customs chargeable under this Act on any           imported materials  of a class or description used           in the  manufacture of  such  goods,  the  Central           Government may,  by notification  in the  Official           Gazette, direct  that drawback shall be allowed in           respect of  such goods  in  accordance  with,  and           subject to, the rules made under sub-section (2).           "(1A) Where  it appears  to the Central Government           that  the   quantity  of   a  particular  material           imported  into   India  is  more  than  the  total           quantity of  like material  that has  been used in           the  goods  manufactured  in  India  and  exported           outside India,  then, the  Central Government may,           by notification  in the  Official Gazette, declare           that so  much of  the material  as is contained in           the goods  exported shall, for the purpose of sub-           section (1), be deemed to be imported material.           (2) The  Central Government may make rules for the           purpose of  carrying out  the provisions  of  sub-           section (1)  and, in  particular, such  rules  may           provide:                (a) for  the payment of drawback equal to the                amount of  duty actually paid on the imported                materials used  in  the  manufacture  of  the                goods or  as is specified in the rules as the                average amount  of duty paid on the materials                of that  class or  description  used  in  the                manufacture of  export goods of that class or                description either by manufacturers generally                or by any particular manufacturer;                (b) for  the production  of such  certicates,

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              docu- 504                ments and  other evidence  in support of each                claim of drawback as may be necessary;                (c) for  requiring the  manufacturer to  give                access to  every part  of his  manufactory to                any officer  of customs  specially authorised                in this  behalf by the Assistant Collector of                Customs to  enable such authorised officer to                inspect the  processes of  manufacture and to                verify  by  actual  check  or  otherwise  the                statements made  in support  of the claim for                drawback."      Section 2(18)  states  "export"  with  its  grammatical variations and  cognate expressions,  means  taking  out  of India to  a place  outside India.  The Customs  and  Central Excise Duties  Drawback Rules,  1971 framed under the Act by section 2(c) also provides as follows:           "28(c) ’export’  with its  grammatical  variations           and cognate expressions, means taking out of India           to a  place outside  India and includes loading of           provisions or  store or equipment for use on board           vessel or aircraft proceeding to foreign port."      The Tribunal found that the shipment was under a C.I.F. contract and  that on  the loading of the goods on board the title passed  to the  purchaser. The Tribunal found that the ship left  Calcutta and  in fact  it had  passed beyond  the territorial waters of India and the engine trouble developed while the  ship was in the High seas and, thus, by reason of the ship  having passed  beyond territorial  waters with the goods on  board, the  export of  the goods  out of India had been  completed.  It  appears  that  subsequently  the  ship decided to  sail into  the  territorial  waters  was  of  no relevance.  The   Tribunal  accepted  that  where  the  ship developed engine  trouble, it  was  beyond  the  territorial waters.      In that  view of  the matter,  the Tribunal  was of the view that under the scheme of section 75, export having been completed, the respondent was entitled to the benefit of the drawback scheme.      On behalf  of the  revenue it had been contended before the Tribunal and it was reiterated before us by Shri Ganguly that proof must be given that the goods had reached ’a place outside India’  in view  of section 2(18) of the Act. It was emphasised that in order to be export under section 2(18) of the Act the goods must be taken out to a place 505 outside India.  Shri Ganguly  submitted that taking out to a place outside India meant and comprehended delivery of goods to a  place outside India. Section 35 of the Act as it stood prior to  the amendment  in 1983  was relied  on. The Madras High Court  has occasion  to consider  this question  in the case of  Lucas TVS  v. Assistant  Collector, [1987]  Vol. 28 E.L.T. 266.  We are  of the  opinion that  in  view  of  the wording  of   the  section,   the  goods  went  out  of  the territorial waters.  When the  ship got  clearance and moved out of  the territorial  waters the export was complete. The title to  the same  goods passed to the exporters. The facts as they  emerge are  that the  goods reached  a place in the high seas  which is outside India and the title of the goods also passed to the purchasers. It is true that the goods did not land in any place because of the defect in the ship. But the expression  "taking out  to a place outside India" would also mean a place in high seas. It is beyond the territorial waters of  India. High  Seas would also mean a place outside

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India, if  it is  beyond the  territorial waters  of  India. Therefore, the goods were taken out to the high seas outside territorial waters of India, they will come within the ambit of  expression  "taking  out  to  a  place  outside  India". Indubitably the  goods had  been taken out of India. "Place" according to Webster Comprehensive Dictionary, International Edition page  964 means  a particular  point or  portion  of space,  especially   that  part  of  space  occupied  by  or belonging  to   a  thing  under  consideration;  a  definite locality or  location. It also means an open space or square in a city. Therefore, in international trade the ship beyond the territorial waters of a country would be a place outside the country,  if the  goods are taken to that place, that is to say,  a situation  outside the  territorial waters  of  a country and the title to the goods passes to the purchasers. Then, in our opinion, the goods are taken to a place outside India.      The expression  "place" will depend for its connotation on the  context in  which it  is used.  In clause of charter party  requiring  charterer  to  procure  safe  "place"  for discharge of  cargo, quoted word meant spot selected to drop anchor plus  area over  which tanker might swing on tide and charter’s duty  was not  fulfilled merely  by selecting area containing both  safe and unsafe berths. The word "place" as used in  a statute relating to searching for stolen goods in any store,  shop, warehouse, or other building or place in a town, includes  a steam-boat  or vessel moored at the wharf. See Words and Phrases, Permanent Edition, Vo. 32A, page 128. The word  "place" is  generally found  in  conjunction  with other  words   which  give  it  a  colour,  and  is  usually controlled by  its context.  For example,  "place for water" includes a  well. See  Stroud’s Judicial  Dictionary,  third edition, volume 3 pages 2199 and 2208. 506      In that  view of  the matter  in our opinion, there was export of  the goods  in terms of section 75 of the Act. The fact that  the ship was brought back to India because of the damages in  the ship  does not,  in our  opinion, affect the position.      In the  premises,  we  are  of  the  opinion  that  the Tribunal was  right in  the view  it took and the respondent was entitled to the benefit of section 75 of the Act. In the aforesaid view of the matter, we decline to admit the appeal and the same is accordingly rejected. G.N.                                       Appeal dismissed. 507