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37. According to the Learned Counsel, the reasoning of the High Court in Pride Foramers case (supra) following which the present case has been decided, is based on the incorrect premise. According to him, this reasoning completely ignores the inclusive part of the definition contained in Section 2(21). The requirement of unloading/loading outside India is absent in sub- clause (ii) of Section 2(21).

38. It is contended by him that the Appellants are entitled to the benefit of the exemption under Section 86(2) read with Section 87 of the Customs Act, 1962 with regard to stores consumed on the oil rigs. Elaborating further, it was submitted that Chapter XI of the Customs Act, 1962 contains Special provisions regarding baggage, goods imported or exported by post and stores. The expression stores is defined in Section 2(38). The goods imported by the Appellants are stores. Section 87 contains statutory exemption with respect to the transshipment of stores. According to him, in order to claim the benefit of the exemption under Section 87 of the Customs Act, the following conditions must be fulfilled: -

a) The imported goods must be stores;
b) The stores must be consumed on a vessel or aircraft;
c) The vessel or the aircraft must be a foreign-going vessel or aircraft; and
d) The stores must be consumed during the period such vessel or aircraft is a foreign-going vessel or aircraft.

39. Where these conditions are fulfilled, a person is entitled to consume the stores without payment of duty. In addition, under Section 86(2), a person is entitled to transship stores to a foreign-going vessel or aircraft, with the permission of the proper officer. That in the present case, each and every requirement of Section 86(2) read with Section 87 has been fulfilled by the Appellants. The Respondents have failed to point out a single missing ingredient. In the circumstances, the proper officer/Respondents were duty bound under law to permit the transshipment of stores without insisting upon the payment of customs duty. On a strict construction of the plain language used under the Customs Act, the Appellants were and are entitled to the benefit of Section 86(2) read with Section 87.

57. The fact that even if the oil rig is accepted as a vessel which carries on its operation in an area over which coastal State exercises limited sovereign rights and to which the Indian Customs Act applies, then, the customs duty would be leviable on the stores consumed on the vessel.

58. That there is neither an ambiguity nor the interpretation of the Court in Pride Foramers case (supra) would result in absurd situation. The Appellant wants the Court to read Section 2(21) of the Customs Act in isolation, which is not the correct approach. There is neither any substitution nor any attempt to read any provision of the Customs Act in a manner contrary to the intent and purport of the Act. The fact remains that even if it is a foreign going vessel, the stores are unloaded and consumed within the maritime boundary or within the limit of Customs Act, Section 12 will be attracted as it would be construed that there has been an import within the territory of India to which the Customs Act applies.

79. It may not be correct to contend that the oil rigs installed by the Appellants answer the description foreign going vessel. A vessel may be a foreign going vessel but if the oil rig is situated in the area to which the Customs Act applies or extends, the aid of Section 2(21) of the Customs Act cannot be taken to get the benefit under Sections 86 and 87 of the same Act. The principle underlying under Sections 86 and 87 is that the stores are consumed on board by a foreign going vessel. If the so-called foreign going vessel is located within a territory over which the coastal State has complete control and has sovereign right to extend its fiscal laws to such an area with or without modifications and the stores were consumed in the area to which the Customs Act has been extended, reference or reliance to the vessel being a foreign going vessel shall be of no consequence and the customs duty would be leviable as the goods are consumed within the territory to which the Customs Act has been extended as per the Maritime Zones Act, 1976 and the International Convention  UNCLOS, 1982.