2026-VIL-890-GUJ-CU
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CUSTOMS High Court Cases

Customs - Confiscation of Goods - Classification of Burnt and Damaged Vehicles - Negative List of Imports - Vessel carrying Japanese manufactured motor cars caught fire while sailing from Colombo off the Sri Lankan coast. After salvage operation, the vessel and cargo consisting of burnt and damaged cars were brought to Alang port for ship-breaking - The Customs Authorities seized the cargo and vessel alleging that the cars were imported without valid import license in violation of Serial No.3 Part J of Negative List of Imports requiring license for commercial and passenger automobile vehicles - Whether burnt and damaged cars which lost their complete identity and utility as motor vehicles due to extensive fire damage and were to be scrapped only can be classified as commercial and passenger automobile vehicles requiring import license under Serial No.3 Part J of Negative List of Imports - HELD - The burnt and damaged cars which suffered extensive fire damage and completely lost their identity and utility as motor vehicles cannot be considered as commercial and passenger automobile vehicles requiring import license under Serial No.3 Part J of Negative List of Imports. All parties to the transaction including the insurers, vessel owner, salvor and subsequent buyers recognized and accepted through contractual provisions and agreements that the cargo was not cars in any serviceable condition but scrap resulting from damage by fire. The distinction between bringing the vessel alongside a port and physically unloading cargo from the vessel is material - Merely bringing the vessel to port does not constitute unloading of cargo. Unloading is physical removal of cargo from the ship, which occurred only after seizure by the department. No unloading in contravention of Section 33 or 34 took place by or under the direction of the appellant before seizure. The vessel was brought to Talaja port which had been notified as a port for ship-breaking under Section 7 of the Act, and no specific permission was required under the Act for the vessel to enter the port - The Customs authorities had wrongly refused permission which was not required by law. Section 111(d) requiring import license, Section 111(h) relating to unloading in contravention of Sections 33 or 34, and Section 115(2) relating to confiscation of conveyance carrying contravened cargo were not attracted in the facts of the case. The CESTAT correctly held that the burnt cars converted into scrap cannot be classified as prohibited goods and are not liable for confiscation – The appeal is answered in favor of assessee and against the revenue - The Appeals are accordingly disposed of
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