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"I am directed to say that the question whether drilling rigs and equipments, their spare, components, etc. would be levied to customs duty when such goods are brought at sites located in the continental shelf and EE2 but outside the territorial waters of India and outside the designated areas notified by the Ministry of External Affairs (MRA), has been examined by the Board in consultation with the Law Ministry and MEA. Section 2 of the Customs Act, 1962 defines "India" to include only its territorial waters. A duty under Section 12 of the Customs Act, 1962 can be levied only if the goods are imported into India as envisaged in the said definition. We may be having sovereign rights over the said Continental Shelf of the Exclusive Economic Zone (EEZ) as declared In the Maritime Zones Act, 1976, but the provisions of Customs law would not become applicable to such areas unless the legislations are specifically made applicable to these areas as provided in the Maritime Zones Act, 1976. It has therefore, been observed by the Law Ministry that "bringing equipment from a foreign country for drilling oil at sites located within the (Exclusive Economic) Zone may not constitute 'import' within the meaning of the provisions of the Customs Act, 1962 until the area where the equipments so brought is declared as a 'designated area' under the Maritime Zones Act, 1976. It has been further opened that "if any area in the EEZ has not been so declared as a designated area, the provisions of the Customs Act, 1962 will not automatically apply to that area.

Section 2(27) of the Customs Act defines India as under :

" "India" includes the territorial waters of India. This definition is relevant only for the purposes of the Customs Act.
(iii) Section 2(21)-- Foreign going vessel or aircraft means any vessel or aircraft engaged in carriage of goods or passengers between any port or airport in India and any port or airport outside India. Whether touching any intermediate port or airport in India or not and includes--
(i) and (ii) .....
(iii) any vessel or aircraft proceeding to a place outside India for any purpose whatsoever.
(iv) Section 2(28) of the Customs Act defines "Indian Customs Waters" means the waters extending into the sea up to the limit of contiguous zone of India under Section 5 of the Maritime Zones Act and includes any bay, gulf, harbour, creek, or tidal river.
(v) Section 53. Transit of goods in same vessel or aircraft Subject to the provisions of Section 11, any goods imported in a vessel or aircraft and mentioned in the import manifest as for transit in the same vessel or aircraft to any port or airport outside India or any customs port or customs airport may be allowed to be so transited without payment of duty.

43. We have discussed the scope and ambit or Maritime Zones Act, 1976. However, at the cost of repetition, we may once again state that by virtue of Section 7 of the said Maritime Zones Act, 1976 Customs Act has been extended to notified areas in the Exclusive Economic Zone/Continental Shelf. By a deeming fiction, the said areas form part of the territory of India mainly for fiscal purposes. This is the underlying Scheme of Section 7 of the Maritime Zones Act, 1976. Therefore, one has to read the Maritime Zones Act. 1976 with the Customs Act, 1962 to decide the points arising in this petition. Section 2(27) defines "India" to include the territorial waters of India. It is an inclusive section. Section 2(15) defines the word "duty" to mean duty of customs leviable under the Customs Act. Section 2(23) defines the word "import" to mean bringing into India from a place outside India. Section 2(25) defines the expression "imported goods" to mean goods brought into India from a place outside India, but does not include goods cleared for home consumption. Section 12 of the Customs Act is the charging section. It falls in Chapter V. It indicates extgibility of the goods imported into India to tax at rates as may be specified under the Customs Tariff Act or any other law for the time being in force. It is well settled that the concept of chargeability is different from the concept of assessment of quantification of the amount payable by way of customs duty. The only charging section for levy of customs duty is Section 12. However, when one comes to assessment or quantification of the amount payable then Sections 14 and 15 come into play. Therefore, one will have to look at Section 12 for the purposes of determining the duty chargeable. The taxable event, therefore, occurs the moment the goods enter the territorial waters of India. Section 53 of the Customs Act refers to transit of goods without payment of duty. It comes in Chapter VIII, which deals with goods in transit. Section 53 of the Customs Act, inter alia, lays down that any goods imported for transit to any place outside India will not be liable to payment of customs duty. Therefore, reading Section 12 with Section 53, it is clear that although entry into territorial waters amounts to import, in case of transit of goods to any place outside India would not be liable to payment of customs duty. In other words, although the goods are chargeable, they are not liable to payment of customs duty because of Section 53 of the Customs Act. Therefore, when the goods enter the territorial waters, there is import but the object of the customs duty is not to levy tax on goods in transit to any place outside India. For the purposes of this case, the words "to any place outside India" are very import. The word "transit", therefore, presupposes that the goods can pass through territorial waters to any place outside India. Now, In the present case, if one reads the Customs Act without reading the Maritime Zones Act, 1976 then the Oil Rigs located in the notified areas/designated areas constitute "place outside India" thereby transit of goods to Oil Rigs would fall within Section 53 of the Customs Act. On the other hand, the very purpose of Sections 5, 6 and 7 of the Maritime Zones Act, 1976 is to declare an area of the contiguous zone/continental shelf/economic zone as a designated area so that exploration, exploitation and protection of resources belonging to India could be carried out. Under the said Act, the Central Government can create Artificial Island, Off-shore Terminals, etc. By the said Act, customs and other fiscal enactments have been extended. Therefore, the object is very clear that the revenue generated from exploration and exploitation should accrue to the coastal State viz. India. It is for this reason that a Financial Memorandum is attached to the Territorial Waters Bill, which indicates that the Central Government is authorised to spend money for regulation, exploration and exploitation of resources within the designated area. Taking into account the object of the said Act, 1976, it is clear that the Parliament has sought to extend the Customs Act to such designated areas. That, without the provisions of the Maritime Zones Act, 1976 and on bare reading of the Customs Act alone the goods imported to the Oil Rigs in the designated area would have attracted Section 53 of the Customs Act in which event the liability to pay customs duty would not have accrued. In fact, it is the basic argument of the petitioner. However, one cannot ignore the provisions of the Maritime Zones Act, 1976. Reading the two Acts together, we are of the view that the subject goods sent to the Oil Rigs do attract Section 12 of the Customs Act and that they do not constitute goods in transit under Section 53 of the Customs Act. When the subject goods entered the territorial waters. Section 12 is attracted. However, the petitioners filed their Bill of Entry/Import Manifest on the footing that they were the goods in transit to a place outside India. The petitioners, therefore, relied upon Sections 53 and 54 of the Customs Act. However, for the reasons mentioned by us hereinabove, the goods are meant for Oil Rigs in the designated area under the Maritime Zones Act, 1976 and, therefore, the provisions of Sections 12, 14 and 15 of the Customs Act, would apply to the subject goods. In other words, the subject goods are not the goods in transit.