Report No. 61

8.4. Difficulties caused by the present position.-

The result of the interpretation placed by the Supreme Court1 is, that if, after the goods being imported have crossed the "customs frontiers" (as interpreted by the Supreme Court) but have not yet reached the "customs barriers" as usually understood, a sale takes place by transfer of shipping documents, the sale is not regarded as taking place in the course of import. Local sales tax is, therefore, leviable on such sales. Now, it has been stated2 by order circles that this interpretation will cause practical difficulties.

Apparently, the practical difficulty likely to be caused is in relation to determination of the actual location of the goods at the time of sale, with reference to customs frontiers, which, after all, are not visible like barriers on the shore. The expression "customs frontiers" was given a vide meaning in the old Sea Customs Act, or to state the position in terms of the present Customs Act, 1962-"territorial waters" have been included within India'-because such a wide connotation is considered necessary for the purposes of the enforcement of the customs law, particularly for surveillance and similar purpose. But, in practice, the actual checking of the goods mostly takes place not at the edge of the national territorial waters, but at a "customs station", when the goods cross the customs barriers3. The expression "customs station" has a statutory connotation4, and can be conveniently utilised.

1. Paras. 8.3 and 8.4, supra.

2. Notes in the Finance Ministry.

3. No definition of "Customs barriers" could be discovered in the Customs Act. See para. 8.6, infra.

4. Section 2(13), Customs Act, 1962, read with section 2(10), section 2(12), section 2(29) and section 7.