C. Mookerjee, C.J.
1. The Petitioner-firm at the material time carried on business, inter alia, of purchasing old ships and dismantling and breaking up the same. Sometime in the year 1978, a vessel named M.V. Ocean Star had called at the Port of Bombay for the purpose of loading cargo. After loading, on 6th December i 978 the said vessel had capsized and sank in the Bombay harbour. The owners of the vessel did not take any steps to salvage the wreck of the said vessel. The Deputy Conservator of the Bombay Port Trust as Receiver in terms of the provisions of Section 14 of the Indian Ports Act, 1908, had issued notice to the owners of the vessel who did not take any action. It is not disputed that after the said vessel was salvaged by Respondent No, 4 along with the broken parts and scrap the vessel had vested in the Government of India.
2. In November 1980 the Deputy Conservator of the 4th Respondent had issued tender notice for disposal of the said salvaged vessel and its parts and scrap, in the prescribed tender form it was inter alia, stipulated : 'Customs duty on the vessel is payable by the successful tenderer' - vide Clause 6. It was further stipulated : '4% service charges on the purchase price is payable to MSTC- Metal Scrap Trading Corporation Ltd., Calcutta 700020 by the prospective buyer' vide Clause 7. Although in terms of the instructions issued the tenderness were entitled to seek clarification on any of the clauses or terms and conditions of sale before hand, if so necessary (vide Clause F of the instructions), the Petitioners at that stage did not raise any objection regarding the conditions for payment of customs duty and 4 per cent service charges to Respondent No. 5 Corporation by the successful tenderer.
3. On 13th January 1981 the Controller of Stores, Bombay Port Trust, with reference to the quotation submitted by the Petitioners, informed the Petitioners that their offer for purchase of the wreck of M.V. Ocean Star including its broken parts and scrap for a sum of Rs. 5,11,111/-had been accepted. It was again specifically mentioned in the said acceptance letter that the sale was subject to the conditions set out therein. One of the said conditions was that customs duty as admissible on the above vessel was payable by the Petitioners to the Customs Authority. Secondly, the Petitioners were required to pay 4 per cent service charges on the purchase price in respect of the scrap to the Metal Scrap Trading Corporation Ltd. It is significant that even at this stage the Petitioners did not take any objection to the demand made for payments of the customs duty and 4 per cent service charges. By their letter dated 27th May 1981 the Petitioners bad requested the Controller of Stores, Bombay Port Trust, to deliver the vessel Ocean Star and her broken parts and scrap. The Deputy Controller of Stores, Bombay Port Trust, by his letter dated 3rd June 1981 had advised the Petitioners about the manner in which the delivery of the vessel and her broken parts etc. was to be taken. Only after the Deputy Conservator of the Bombay Port Trust by his letter dated 9th July 1981 had, inter alia, asked the Petitioners to lodge the necessary deposit with the Docks Manager and to settle the customs duty, the Petitioners for the first time by their letter dated 23rd July 1981 had raised objection regarding the demand for payment of the customs duty and commission charges to the Metal Scrap Trade Corporation Ltd. The Controller of Stores, Bombay Port Trust, by his letter dated 30th July 1981, had disputed the said contentions of the Petitioners and had again demanded payment of the customs duty and commission charges By their letter dated 14th September 1981 the Petitioners admitted that they had signed the tender which stipulated, inter alia, payment of customs duty and commission charges. In the said letter the Petitioners had taken subsequently the same stand which they later on took by filing this Writ Petition. According to the Petitioners, the said conditions for payment of customs duty and service charges were legally untenable because customs duty was not attracted. Secondly, no services had been rendered by the Metal Scrap Trading Corporation Ltd. Therefore, no charge was payable to the Corporation.
4. The Customs authorities by their letter dated 19th October 1981 had demanded payment of customs duty on the said salvaged vessel M.V. Ocean Star and her broken parts and scrap purchased by the Petitioners. Thereafter the Petitioners moved this Court under Article 226 of the Constitution of India and obtained the present Rule.
5. In our view, this Writ Petition ought to fail both on the ground that the discretionary relief under Article 226 of the Constitution ought not to be granted to the Petitioners and secondly on the ground that the demand for payment of customs duty and commission charges was legal and, therefore, the Respondents did not act without lawful authority. The learned Counsel for the Respondent No. 4 was right in the submission that in essence the transaction in question relating to purchase of the salvaged vessel by the Petitioners was in the realm of contract. Undoubtedly, the Respondents were under obligation to act fairly, reasonably and in accordance with law. In the instant case, tenders had been invited on behalf of the Respondent No. 4 and the same were submitted by the Petitioners and others upon the basis that customs duty would be payable by the successful tenderer. In addition, service charges were to be paid to the Respondent No. 5. Ordinarily the Court ought not to permit a successful bidder to deviate from any of the terms upon which his tender had been accepted. We have also indicated that at somewhat belated stage the Petitioners for the first time had raised objection and did not choose to protest and seek clarification before submission of the tender by the Petitioners and others. All tenders presumably had been submitted subject to the said stipulation of the payment of customs duty and commission charges by the successful bidder. Therefore, this would be a fit case in which the Court may legitimately decline to extend its discretion in favour of the party who in effect tried to obtain an unfair advantage and also to commit a breach of the conditions under which it had submitted the tender.
6. We are unable to give any countenance to the first submission made on behalf of the Petitioners that in the instant case the matter of salvaging of the vessel and its subsequent sale did not involve importation attracting payment of customs duty. M.V. Ocean Star as a sea-going vessel had berthed at the Bombay Port but after loading cargo the vessel had capsized and sank. We have mentioned that by reason of the provisions of Section 14 of the Indian Ports Act the salvaged vessel had vested in the Government of India. While according to the definition of the expression 'goods' given in Clause (22) of Section 2 of the Customs Act, 1962, goods will include, inter alia, vessels, aircrafts and vehicles, before she had sunk and later was salvaged as a wreck. M.V. Ocean Star being a conveyance was not liable to be levied customs duty; but after the said vessel had wrecked and was salvaged, it was no longer a conveyance for carriage of other goods. The salvaged vessel and her parts were goods. In this connection, the learned Counsel for the Respondent Nos. 1 to 3 has drawn our attention to the provisions of Section 21 of the Customs Act which is in the following terms:
21. All goods, derelict, jetsam, flotsam and wreck brought or coming into India, shall be dealt with as if they were imported into India, unless it be shown to the satisfaction of the proper officer that they are entitled to be admitted duty-free under this Act.
We are unable to make any distinction between goods including derelict, jetsam, flotsam and wreck brought voluntarily by an agency and a seagoing vessel becoming wrecked in the port ceasing to be an ocean-going vessel. Since the vessel was no longer an ocean-going vessel, she was a wreck and ought to be dealt with as if imported into India.
7. In view of the provisions of Section 12 read with Section 21 of the Customs Act, we find no substance in the second submission made on behalf of the Petitioners that even if it was a case of importation it was merely wreck and no longer a ship or a vessel. After the ship sank in the Bombay harbour and it was salvaged, as already observed, it came within the definition of 'goods' given in Section 3(22) read with Section 21 of the Act. The expression 'import' has been defined is Section 2(23) of the Customs Act to mean 'bringing into India from a place outside with its grammatical variations and cognate expressions'. In the above view, after she sank and ceased to be an ocean-going vessel, M.V. Ocean Star was only fit to be scrapped for the purpose of domestic consumption. The learned Counsel for the Respondent No. 2 has also rightly pointed out that under Sub-section (2) of Section 12 of the Customs Act, all goods belonging to the Government are also liable to be levied such rates of customs duty as may be specified under the Customs Tariff Act, 1975, or any other law for the time being in force.
8. The Petitioners have taken a somewhat inconsistent stand in respect of Notification No. 262-Cus. dated 11.10.1955 granting exemption to ocean-going vessels. The said notification reads as follows:
EXEMPTION NOTIFICATION
Exemption to ocean-going vessels other than vessels imported to be broken up :- Ocean going vessels other than vessels imported to be broken up, are exempt from the payment of Customs Duty leviable thereon:Provided that any such vessel subsequently broken up shall be chargeable with the duty which would be payable on her if she were imported to be broken up.
According to the first paragraph of the said notification, ocean-going vessels except those which are imported to be broken up at the relevant time were exempt from customs duty leviable thereon. But according to the proviso, in case an ocean-going vessel is subsequently broken up, the same would be charged with duty which would be payable on her if she were imported. In other words, even in case an ocean-going vessel had been originally brought within the territorial waters of India without any intention to have it broken up, customs duty would be payable in the event the vessel is subsequently broken up. Such breaking up may be a voluntary act or because of a reason or circumstance beyond the control of the person bringing the ship or becoming its owner. In the event the said notification Exhibit 'P' to the Writ Petition was not applicable, the Petitioners would be liable to pay customs duty in terms of Section 12 of the Customs Act. Alternatively, if the Petitioners tried to place reliance upon the said notification, in terms of the proviso they would still be liable to pay customs duty.
9. We find also no substance in the remaining contention raised on behalf of the Petitioners regarding the demand for payment of service charges to the Respondent No. 5. In the affidavit in reply filed on behalf of the 5th Respondent it has been stated that the said Respondent would be the canalising agency appointed under the Imports and Exports (Control) Act, 1947, the Import Control Order, 1955 and the Import Policy as it stood at the relevant time. A copy of the said Import Policy for the year 1978-79 has also been placed before us to substantiate the said contention. According to Appendix 8 of the said Import Policy for 1978-79, the authority of the Respondent No. 5 to act as a canalising agency includes rerollable scrap in the form of old ships, vessels, etc. for breaking. In the circumstances, it was not really relevant whether the Petitioners themselves brought the seagoing vessel or had become owners after the vessel became a wreck. In either case, the Petitioners would be liable to pay service charges. Rendering of any service directly to the Petitioners could not be a condition for upholding the validity of service charges to the Respondent No. 5. On the other hand, as the canalising agency, the Sth Respondent was found to perform duties in the matter of disposal or distribution of the items canalised I for import to the said Respondent.
10. The objection of the Petitioners regarding demand of the additional duty under the Customs Tariff Act has no substance. The point is concluded by the decision of the Supreme Court in the case of Khandelwal Metal & Engg. Works v. Union of India : 1985(20)ELT222(SC) . The Supreme Court had, inter alia, rejected a similar contention that Section 3(1) of the Tariff Act was not attracted in case of report of brass scrap merely because the goods had been reduced to scrap by reason of damage, wear and tear. The Supreme Court pointed out that the true test was as to what was the description of the articles imported. If the articles were brass scrap, the limited inquiry which had to be made was whether brass scrap could come into being during the process of manufacture. if the answer was in the affirmative, the imported brass scrap would be chargeable to additional duty in accordance with Section 3(1) of the Tariff Act. The test in reality was the import of the goods and not their manufacture.
11. In the above view, all the contentions raised on behalf of the Petitioners fail.
12. We accordingly discharge this Rule with costs.
13. The bond furnished by the Petitioners will remain until the payment of the additional duty for which two months' time is given. Since no direction was given in the interim order regarding payment, if any, of interest upon the unpaid additional duty, we are not inclined to consider the prayer now made for payment of the interest for the past period. We, however, direct in the facts of this case payment of interest at the rate of 10 per cent upon the unpaid additional duty with effect from this day.
14 The learned Counsel for the Petitioners prays for certificate to file an Appeal in the Supreme Court. We reject the said prayer. We make it clear that the question whether interest is to be awarded upon unpaid additional duty in case a rule is discharged must depend on the facts of each case and we find the present case to be one such in which interest ought to be awarded.