Lucas T.V.S. Padi, Madras vs Assistant Collector of Customs, Madras and Others

Pandmanaban, J.—Messers. Lucal T. V. S. Padi, Madras, the petitioners herein, are manufactures of electrical accessories for automobiles

and another engines. In the course of their business, they exported certain items of their manufacture through the ship m. v. Ratna Usha. After the

goods were loaded in the vessel, and while the vessel was still in port, there was a fire in the vessel as a result of which the goods were damaged.

Consequently, the goods were unloaded. Subsequently, the damaged goods were sold in auction and were cleared by M/s. Lucal Indian Service

Ltd., Madras, which is a subsidiary of the petitioners. It bid at the auction to avoid the damaged goods being sold in the market as genuine goods.

The petitioners then claimed before the Assistant Collector of Customs, the first respondent herein, the drawback of the duty on the gods exported

by them. The first respondent by his order dated 27th November 1974 ejected the claim on the ground that the god had not crossed the custom''s

frontier and therefore it could not be said that the goods had been exported out of the country. The petitioners further appealed to the second

respondent, the Appellate Collector of Customs, Madras, who dismissed the appeal by his order dated 6th April 1976. The further revision

preferred by the petitioners to the third respondent, the Union of India, also failed. The petitioners have therefore filed this writ petition for the issue

of a writ of certiorari to quash the order dated 22nd November 1976 passed by the 3rd respondent confirming the orders passed by respondents

1 and 2 on the ground that the petitioners have not exported the good and Therefore are not entitled to claim the draw back of the duty on the

goods.

It is not disputed that after the good were loaded in the vessel they got damaged and had to be off loaded in a damaged condition. It is also

admitted that in the auction held by the Port authorities the damaged goods were purchased by Messrs. Lucal Indian Service Ltd., Madras, a

subsidiary concern of the petitioners and they cleared the goods from the Port under a coastal bill of entry. Mr. A. R. Ramanathan for the

petitioners submits that the goods had already been sold to the foreign buyer, the property had passed and even the sale price had been received

by the petitioner from the foreign buyer, Consequently, when the goods have been loaded in the ship, they must be deemed to have been exported.

Section 75 of the Customs Act, 1962, reads as follows -

Where it appears to the Central Government that in respect of goods of any class or description manufactured in India and exported to any place

outside India, a drawback should be allowed to 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).....

It is not disputed by Mr. U. N. R. Rao for the respondent that if it is found that the goods had been exported by the petitioners to any place

outside India, that the petitioners would be entitled to the drawback as provided for u/s 75 of the Customs Act and the rules made thereunder.

Section 2(18) of the Customs Act defines export thus "" Export with its grammatical variations and cognate expression, means `taking out of

India to a place outside India''. u/s 2(19) `export goods'' means any goods which are to be taken out of India to a place outside India. Mr.

Ramanathan''s contention is that the goods loaded in the vessel were export goods to be taken out of India to a place outside India. Further, the

property in the goods had passed to the foreign buyer. In view of this, the learned counsel would submit that the goods have been exported out of

India. I am unable to agree. From the definition of the word it is clear that export had reference to taking cut of goods which had become part and

parcel of the mass of the property of the local area. It means only taking the goods out of the country. Section 2(27) of the Customs Act defines

India thus : ""India includes the territorial waters of India,"". Sec. 2(28) defines Indian customs waters as follows ""Indian Customs waters means the

water extending into the sea to a distance of 12 nautical miles measured from the appropriate base line on the cost of India and includes any bay,

gulf, harbour, creek or tidal river"". It will therefore be seen that as per the definition of India and Indian Customs waters, the territorial water extend

upto a distance of 12 nautical miles measured from the appropriate base line on the coast of India and includes any bay, gulf, harbour, creek or

tidal arrives. To bring an export within the meaning of Section 2(18) the goods must have been taken out of India viz. beyond the territorial waters

of India to a place outside India. Admittedly, the goods have not gone outside the Port of Madras. The fact that the petitioners had loaded the

goods in the vessel or the property in the goods had passed to the foreign buyers is not relevant for a consideration of the question whether the

goods had really been exported out of India. Similarly, the fact that the petitioners had not taken back the goods and it was the Lucal Indian

Services Ltd., purchased the goods in auction held by the Port trust is also certainly irrelevant to determine whether there was an export of the

goods in the first instance. I hold that there could not be any export of goods unless the goods had been taken out of the territorial water of India.

In the result, the conclusion arrived at by the respondents in the respective orders passed by them are correct. The writ petition therefore fails and

is dismissed. There will be no order as to costs .