# Anwarkhan Mahboob Co v. State of Bombay (now Maharashtra)

- **Citation:** [1998] 2 S.C.R. 293
- **Court:** Supreme Court of India
- **Decided:** 1998
- **Case number:** Civil Appeal Nos. 1502-1504 of 1984
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/anwarkhan-mahboob-co-v-state-of-bombay-now-maharashtra-16185
- **Pages:** 10

## Headnote

294
SUPREME COURT REPORTS
[1998] 2 S.C.R.
A also not disputed by the department. Thus considering the question from all
the different angles, it is reasonable to take the view that merely because
transhippers are useofor carrying cargo for loading into the bulk carriers
(those being unable to touch the port) they cannot be excluded from the
category of Ocean-going vessels. At any rate it has been demonstrated by the
B Government that it was not very much interested in segregating transhippers
from the category of ocean-going vessels as the government brought out a
new notification on 19.3.97, in supersession of the earlier notification
;... -
covering all vessels including transhippers within the ambit of ocean-going
vessels, almost immediately after pronouncement of the decision in Chowgule
and Co. (P) Ltd. The subsequent development on account of its close proximity
C to time cannot be overlooked as ofno impact. (301-D-E]
Chowgule & Co. (P) Ltd. v. Union of India, (1987] 2 SCR 351, overruled.
2. The question whether a transhipping vessel is an ocean-going vessel
cannot solely rest on the test of its dominant use to which their owner put
D them at times. Use may vary from season to season, port to port and also
manager to managers. So in this area of understanding use of the article
stands down-staged, and the court must look at to know what actually the
commodity is. (300-E(
E
Dunlop India Ltd. v. Union of India, (1976] 2 SCR 98, relied on.
Good)'ear India Ltd. v. Union of India, (1997] 5 SCC 752, referred to.
3. The experession "ocean-going vessels" has not been defined in the
notification dated 11.10.58. However, Section 2 (21) of the Customs Act,
F 1962 contains definition of"Foreign going-vessel" and Section 3 (41) of the
f.
Merchant Shipping Act, 1958 contains definition of "Sea-going Vessels".
For all practical purposes the words "sea" and ·"ocean" are two expressions
of the same geographical feature concerning the vast body of salt water one
side of which appears as horizon "ocean-going vessels" indeed the latter
G may include the former. How an ocean-going vessel is understood in maritime
enterprises can be seen from the dictionaries wherein its meaning is given
as "a ship, capable of crossing oceans"; "a ship designed and equipped to
).._
travel on the open sea"; "a ship suited for travel on the open sea".
(299-D; 300-H; 301-A-B]
H
Shorter Oxford Dictionary; Random House Dictionary, Collins
U.0.1. v.V.M. SALGAONCAR AND BROS. (P.) LTD.
295
Dictionary of English language, referred to.
4. It cannot be said that the transhippers were not imported for "home
consumption", as the commodity remains intact without any alteration, even
after it is put to use. The word "consumption" in fiscal law need uot be
confined to such a narrow meaning. It has a wider meaning in which any sort
of utilisation of the commodity would as well amount to consumption of
article, albeit that article retaining its identity even after its use. In the
• _.._
context in which the expression "home consumption" is used in section 46
A
B
of the Customs Act, it does not warrant a construction that the commodity
should have been completely used up. Even putting the commodity to any type
ofutility within the territory oflndia will tantamount to "home consumption". C
1297-E-F, 298-E]
Anwarkhan Mahboob Co. v. State of Bombay (now Maharashtra),
(1961] I SCR 709 and Kathiawar Industries ltd. v. Jajfarabad Municipality,
AIR (1979) SC 1721, relied on.

## Text

294
SUPREME COURT REPORTS
[1998] 2 S.C.R.
A also not disputed by the department. Thus considering the question from all
the different angles, it is reasonable to take the view that merely because
transhippers are useofor carrying cargo for loading into the bulk carriers
(those being unable to touch the port) they cannot be excluded from the
category of Ocean-going vessels. At any rate it has been demonstrated by the
B Government that it was not very much interested in segregating transhippers
from the category of ocean-going vessels as the government brought out a
new notification on 19.3.97, in supersession of the earlier notification
;... -
covering all vessels including transhippers within the ambit of ocean-going
vessels, almost immediately after pronouncement of the decision in Chowgule
and Co. (P) Ltd. The subsequent development on account of its close proximity
C to time cannot be overlooked as ofno impact. (301-D-E]
Chowgule & Co. (P) Ltd. v. Union of India, (1987] 2 SCR 351, overruled.
2. The question whether a transhipping vessel is an ocean-going vessel
cannot solely rest on the test of its dominant use to which their owner put
D them at times. Use may vary from season to season, port to port and also
manager to managers. So in this area of understanding use of the article
stands down-staged, and the court must look at to know what actually the
commodity is. (300-E(
E
Dunlop India Ltd. v. Union of India, (1976] 2 SCR 98, relied on.
Good)'ear India Ltd. v. Union of India, (1997] 5 SCC 752, referred to.
3. The experession "ocean-going vessels" has not been defined in the
notification dated 11.10.58. However, Section 2 (21) of the Customs Act,
F 1962 contains definition of"Foreign going-vessel" and Section 3 (41) of the
f.
Merchant Shipping Act, 1958 contains definition of "Sea-going Vessels".
For all practical purposes the words "sea" and ·"ocean" are two expressions
of the same geographical feature concerning the vast body of salt water one
side of which appears as horizon "ocean-going vessels" indeed the latter
G may include the former. How an ocean-going vessel is understood in maritime
enterprises can be seen from the dictionaries wherein its meaning is given
as "a ship, capable of crossing oceans"; "a ship designed and equipped to
).._
travel on the open sea"; "a ship suited for travel on the open sea".
(299-D; 300-H; 301-A-B]
H
Shorter Oxford Dictionary; Random House Dictionary, Collins
U.0.1. v.V.M. SALGAONCAR AND BROS. (P.) LTD.
295
Dictionary of English language, referred to.
4. It cannot be said that the transhippers were not imported for "home
consumption", as the commodity remains intact without any alteration, even
after it is put to use. The word "consumption" in fiscal law need uot be
confined to such a narrow meaning. It has a wider meaning in which any sort
of utilisation of the commodity would as well amount to consumption of
article, albeit that article retaining its identity even after its use. In the
• _.._
context in which the expression "home consumption" is used in section 46
A
B
of the Customs Act, it does not warrant a construction that the commodity
should have been completely used up. Even putting the commodity to any type
ofutility within the territory oflndia will tantamount to "home consumption". C
1297-E-F, 298-E]
Anwarkhan Mahboob Co. v. State of Bombay (now Maharashtra),
(1961] I SCR 709 and Kathiawar Industries ltd. v. Jajfarabad Municipality,
AIR (1979) SC 1721, relied on.
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1502-1504
of 1984 Etc.
D
From the Judgment and Order dated 30.12.80 of the Hon'ble Judicial
Commissioner, Goa, Daman & Diu at Panaji, in Special Civil Application Nos.
2, 9 and 71- of 1972.
E
H.N. Salve, Atul Shetalward, P.H. Parekh and Ms. Shashi Juneja for the
Appellant in C.A. No. 3409/87.
M. Gauri Shankar Murthi, Y.P. Mahajan and V.K. Verma for the Appellant F
in C.A. Nos. 1502-04/84 and Respondent in C.A. No. 3409/87.
H.N. Salve (Sandeep Narain) for Shri Narain for the Respondent No. 3
in C.A. No. 3409/87.
H.N. Salve, S.K. Mehta, Dhruv Mehta, Fazlin Anam and Ms. Shobha G
Verma for the Repondent No. 2 in C.A. No. s. 1502.04/84.
G.L. Sanghi, S.K. Mehta, Dhruv Mehta, Fazlin Anam and Ms. Shobha
Verma for the Respondent No. 4 in C.A. No. 3409/87.
The Judgment of the Court was delivered by
H
296
SUPREME COURT REPORTS
[1998) 2 S.C.R.
A
THOMAS, J. Whether vessles whk:h are used as transhippers can also
be treated as "ocean-going vesscls"is the short but hotly mooted issue
involved in these appeals. It was once decided by a Bench of two Judges of
this Court in Chowgule & Co. Pvt. ltd. v. Union of India & Ors., [1987} 2
SCR 351, that such vessels cannot be termed as "ocean-going vessels".
B Another Bench has now expressed the opinion that the ratio in the above
decision requires reconsideration by a larger Bench. Thus, these matters have
come up before us.
Some facts necessary for these appeals can be stated thus: Section 46
of the Customs Act, 1962 requires the importer of any goods, other than
C goods intended for transit or transhipment, to present a Bill of Entry for home
consumption of such goods in the prescribed form. By a notification issued
by the Ministry of Finance (Department of Revenue) Government of India on
I I.I 0.1958, "ocean-going vessels" have been exempted from payment of
customs duty. The said notification reads thus:
D
E
"Under Govt. of India Ministry of Finance (Dept. of Revenue),
Notification No. 262-Customs dated the 11th October, 1958, oceangoing vessels other than vessels imported to be broken up, are exempt
from the payment of customs duty leviable thereon. Provided that any
such vessel if subsequently broken up shall be chargeable with the
duty which would be payable on her if she were imported to be broken
up."
Some persons who imported transhippers (vessels fitted with equipment
for transhipping and topping operations) claimed the benefit of the said
notification on the premise that those transhippers are also ocean-going
F vessels. But the Customs authorities insisted on them to file Bills of Entry
under Section 46 of the Act in respect of such vessels. The Assistant
-f·-~
Collector of Customs ordered; in confirmation of the aforesaid stand of the
Customs officials, that the importers should file Bills of Entry for payment of
customs duty. Then those importers challenged the orders of the Assistant
Collector. Some of them went straight to the High Court under Article 226 of
G the Constitution while others approached the statutory authorities up to the
Customs Excise & Gold (Control) Appellate Tribunal. The orders impugned
before us thus relate to the question whether such transhippers are ocean-
>---
going vessels. Importers have filed the appeal challenging the decision which
negatived their contention and Union oflndia has filed the appeals challenging
H those decisions which upheld the contention of the importers.
-·
~
-i'
...
U.0.1. v.V.M. SALGAONCAR AND BROS. (P.) LTD. [THOMAS, J.] 297
The common features in all cases are the following: Transhippers are A
vessels used for carrying cargo loaded from the harbour and they proceed
to outer sea for unloading it into large vessels afloat in high seas. Such
transhippers have been specially fitted with adequate equipment to carry out
the said task. (That operation is called topping up work.) Some of the vessels
were fitted with added holdes on both sides, cranes, conveyors and other B
ship loading equipment designed for transfer operations.
In Chowgule & Co. Pvt, Ltd., (supra) learned Judges have noted that
the transhippers involved in that decision were capable of being used us
ocean going vessels and were, in fact, so used during off-seasons when it
was not parcticable to do topping up operations. Those vessels are not only c
capable of being used but were actually used as cargo ships during offseasons. They were structurally and technically competent to go on the high
seas and they were certified to be so competent by appropriate maritime
arthorities. Even in the course of topping up operations during off-seasons,
those transhippers have to go into the open sea to reach the bulk carriers.
D
Despite all the aforesaid features learned Judges did not agree with the
contention of the importers that those vessels were ocean-going vessels. The
following observation is the ratio of the decision :
"But in our view, these operations do not make these vessels ocean E
going vessels when their primary purpose and the purpose for which
they were permitted to be purchased and brought to Indian waters,
is to conduct topping up operations in Indian territorial ·waters and
not to serve as ocean-going vessels."
Learned counsel for the importers, in the course of their arguments F
raised an incidental contention that transhippers were not imported for "home
consumption" as the commodity remains intact, without any alteration, even
after it is put to use. It was suggested that consumption wou Id invo Ive
complete using up of the atricle to such an extent that identity of the consumed
article becomes non-existent.
G
The word "consumption" may involve in the narrow sense using the
article to such an extent as to reach the stage of its non-existence. But the
word "consumption" in fiscal law need not be confined to such a narrow
meaning. It has a wider meaning in which any sort of utilization of the
commodity would as well amount to consumption of the article, albeit that H
298
SUPREME COURT REPORTS
[1998] 2 S.C.R.
A article retaining its identity even after its use.
B
A Constitution Bench of this Court has considered the ambit of the
word "consumption" in Article 286 of the Constitution in Mis. Anwarkhan
Mahboob Co. v. State of Bombay (now Maharasthra) and others, (1961] I
SCR 709. There Lordships observed thus :
"Consumption consists in the act of taking such advantage of the
• _
commodities and services produced as constitutes the "utilization"
thereof. For each commodity, there is ordinarily what is generaHy
considered to be the final act of consumption. For some commodities,
C
there may be even more than one kind of final consumption ....
In the absence of any words to limit the connotation of the word
"consumption" to the final act of consumption, it will be proper to
think that the Constitution-makers usechhe word to connote any kind
of user which is ordinarily spoken of as consumption of the particular
D
commodity."
In another decision a two Judge Bench of this Court considered the
scope of the words "Consumption" vis-a-vis "use." (llide Kathiawar Industries
Ltd. v. Jaffrabad Municipality, AIR (I 979) SC 1721. There it was held that the
precise meaning to be given to those words would depend upon the context
E in which they are used. It is in a primary sense that the word "consumption"
is understood as using the article in such a manner as to destroy its identity.
It has a wider meaning which does not involve the complete using up of the
commodity.
F
In the context in which the expression "home consumption" is used in
Section 46 of the Customs Act it does not warrant a construction that the
commodity should have been completely used up. Even putting the commodity
to any type of utility within the territory of India willl tantamount to "home
consumption".
G
We would now turn to the question whether transhippers are oceangoing vessels?
Jn the order of reference Bharucha and Sen, JJ, have expressed that
"there is, prim a facie, merit in the submission on behalf of the owners that an
ocean going vessel is a vessel equipped, crewed and licensed to go out into
H the ocean, regardless of whether or not it actually does, and that the
...
...
--
U.0.1. v.V.M, SALGAONCAR AND BROS. (P.) LTD. [THOMAS, J.] 299
transhippers as shown by the record, are such vessels, also, they do, in fact A
go out into the ocean on their day to day business to load ore and, in the
monsoon, to carry cargo to or seek refuge in other Indian or foreign ports."
It may be contextually useful to mention that soon after the decision
was rendered by a two Judge Bench of this Court in Chowgule & Co. Pvt.
Ltd, (supra), a notification was issued on 19.3.1997 by the Government of B
India in supersession of the earlier notification (which has been extracted
above) exempting all the vessels (other than floating structures) from the
whole of the duty of customs leviable thereon except those which are imported
for the purposes of breaking up.
The contention was raised on behalf of the owners of the vessels that
the close proximity of the time at which Government issued the subsequent
notification is a telling circumstance that Government of India did not intend
c
to exclude transhippers from the category of ocean-going-vessels. However,
Shri Gauri Shankar Murthi, learned counsel for the Revenue forcefully
contended that the transhippers cannot get the benefit of the first notification D
at least until the Government of India issused the second notification dated
19.3.1997.
The expression "ocean-going vessels," unfortunately, has not been
defined in the notification dated 11.10.1958 and that vacuum created room for E
this dispute. However, Customs Act contained definition for the term "foreign
going vessel" in Section 2(21 ), as a vessel engaged in carriage of goods or
passengers between any port in India and any port outside India and includes
"any vessel engaged in fishing or any other operations outside the territorial
waters of India."
The limit of territorial waters is fixed under Section 3(2) of the Territorial
Waters Continental Self, Exclusive Economic Zone and other Maritime Zones
Act, 1976 (Act No. 80 of 1976) thus:
F
"The limit of territorial waters is the line every point of which is at a G
distance of twelve nautical miles from !he nearest point of the
appropriate baseline."
We find much force in the contention of the learned counsel for the
owners that, if a vessel which is engaged in fishing or any other operations
outside the territorial waters of India, though not crossing into the territorial H
300
SUPREME COURT REPORTS
[1998) 2 S.C.R.
A waters of any other foreign country, could legitimately be included in the
category of foeign going vessel, how a transhipper which often goes into the
open sea for transhipping operations cannot be regarded as an ocean-going
vessel?
B
Shri Murthi, learned counsel for the Revenue contended that the use
of transhippers is not for going beyond the limit of territorial waters and the
ambit of the expression "ocean-going" could be judged on the test of its
;.-
dominant use notwithstanding that it may jut into the open sea infrequently.
In support of the above proposition, learned counsel relied on the decision
of this Court in Goodyear India Ltd. v. Union of India, (1997) 92 ELT 14 =
C [1997) 5 SCC 752. Learned senior counsel, who argued for the owners of
transhippers on the other hand contended that while interpreting the meaning
of the words in fiscal connotations, meanings attached to such expressions
by people conversant with the subject should normally be adopted.
D
A three Judge Bench of this Court in Dunlop India Lid. v. Union of
India & Ors., (1976) 2 SCR 98 has observed thus:
E
F
"it is well established that in interpreting the meaning of words in a
taxing statute, the acceptation of a particular word by the Trade and
its popular meaning should commend itself to the authority.
xxx
xxx
xxx
xxx
It is clear that meaning given to articles in a fiscal statute must be as
people in trade and commerce, conversant with the subject, generally
treat and understand them in the usual course. But once an article is
classified and put under a distinct entry, the basis of the classification
is not open to question. Technical and scientific tests offer guidance
only within and known in common parfance, we then see no difficulty
for statutory classification under a particular entry.
G
We do not think that, in the present case, the question whether a
transhipping vessel is an ocean-going vessel, can solely rest on the test of
its dominant use to which their owners put them at times. Use may vary from
season to season, port to port and also managers to managers. So in this area
of understanding use of the article stands down-staged, and the court must
H look at to know what actually the commodity is.
U.0.1. v.V.M. SALGAONCAR AND BROS. (P.) LTD. [THOMAS, J.] 301
"'''"'~
In the Merchants Shipping Act, 1958, the expression "sea-going vessels" A
~
is used and defined it in Section 3( 41 ), like this:
-.,·
"Sea-going", in relation to a vessel means a vessel proceeding to sea
beyond inland waters or beyond waters declared to be smooth or
partially smooth waters by the Central Government by notification in B
official gazette."
_..(
Thottgh an endeavour was made before the Tribunal to show that there
is a shade of difference between the two words "sea" and "ocean", we are
not disposed to attach much emphasis on the nuances in the semantics now.
For all practical purposes the words "sea"and "ocean" are two expressions c
of the same geographical feature concerning the vast body of salt water one
side of which appears as horizon from the other. Hence we have no doubt
that what is meant by the expression "ocean-going vessel" is not qualitatively
different from "sea-going vessels", indeed the latter may inculde the former.
How an ocean-going vessel is understood in maritime enterprises can D
...._
now be looked into. In the Shorter Oxford Dictionary.,it is shown as "a ship
..-
capable of crossing oceans". In the Random House .Oictionary, it is shown
as "a ship designed and equipped to travel on the open sea". In the Collins
Dictionary of English Language, it is defined as "a ~hip suited for the travel
on the open sea".
-
E
There is no dispute for the Department that by design
1 and equipment,
transhippers are intended to be used mostly to carry the cargo from harbours
to the high seas and vice-versa. That such tniQshippers often move ~to the
open sea is also not disputed by the Department. Thus considering the
F
question from all different angles, it is reasonable to take the view that merely
, ,J.
beacuse transhippers are used for carrying cargo for loading into the bulk
carriers (those being unable to touch the Port) they cannot be excluded from
the category of ocean-going vessels. At any rate it has been demonstrated
by the Government that it was not very much interested in segregating
transhippers from the category of ocean-going vessels as the Government G
brought out a new notification enveloping all vessels including transhippers
within the ambit of ocean-going vessels, almost immediately after
-....(
pronouncement of the decision in Chowgule & Co. Pvt. Ltd. (supra).That
subsequent development on account of its close proximity of time cannot be
overlooked as of no impact.
H
302
SUPREME COURT REPORTS
[1998] 2 S.C.R.
A
In the result we accept the contention of the owners of the transhippers
that such vessels are entitled to the benefit of the Notification dated I I.I 0.1958.
The appeals are disposed of in the above terrms.
H.K.
Appeals disposed of.