(Writ petitions filed under Article 226 of the Constitution of India for the issue of writ of certiorarified mandamus calling for the records of the second respondent in its proceedings in T.Cs.(R)No.2682 and 2683 of 2000 and quash the order made therein dated 14.07.2000 and further direct that the petitioner is entitled to exemption on the disputed turnover of Rs.2,62,93,033/- pertaining to the assessment year 1986-87 and Rs.3,71,00,211/- pertaining to the assessment year 1985 -86 under the CST Act, 1956. )

R. Jayasimha Babu, J.

The assessee here sold goods which it had imported and which goods had been assessed to duty after a bill of entry has been filed in respect of those goods, but, on which the duty had not been paid, the same having been warehoused in the Customs Port the Port being Chennai. The sale was effected by transferring the documents of title while the goods were in the Customs warehouse which were located within the Customs station. Duty was paid on these goods by the buyer, who cleared the goods under Section 47 of the Customs Act and removed the goods out of t he Customs station.

2. The goods in question is news print, which the petitioner State Trading Corporation of India as the canalising agent, imported for the users of news print. The sales, which were the subject matter of the assessment for the years 1986-87 and 1985-86, were effected to the publishers of news papers in the State of Tamil Nadu, the newspapers being, The Hindu, The Dinakaran and The Daily Thanthi. No sales tax was collected by the assessee on those sales, the dealer having always regarded the sale as one having been effected in the course of import. 3. The dealers claim for exempting that part of its turnover from assessment to the tax under the Tamil Nadu General Sales Tax Act was negatived by all the authorities under the as also by the Special Taxation Tribunal whose order is the subject matter of challenge before us.

4. The law which governs the matter is the Central Sales Tax Act ( the), Section 5(2) of which deals with sales in the course of import. That sub section 2 of Section 5 reads as under,

"A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India".

5. For a sale to be one in the course of import it has to be either one which has occasioned the import or has been effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India. Admittedly, in this case, the sale effected by the dealer is not one which occasioned the import. The only question required to be considered is as to whether the sale effected by transfer of documents of title to the goods was made before or after the goods had crossed the customs frontiers of India.

6. The words "crossing the customs frontiers of India" have been defined in Section 2 (ab) of the. That definition reads as under:

"Crossing customs frontier of India" means crossing the limits of the area of a customs station in which imported goods or exported goods are ordinarily kept before clearance by customs authorities.

Explanation: For the purposes of this clause, "customs station" and "customs authorities" shall have the same meanings as in the Customs Act, 1962."

7. The Customs frontier for the purpose of this Act is thus equated to the limits of the area of the Customs station in which the goods are stored, crossing of such station being regarded as amounting to crossing the customs frontiers of India. The customs station referred to in this definition is the one which is defined as such under Section 2(13) of the Customs Act: "Customs station means any customs port, customs airport or land customs station". Customs Port is defined in that act in Section 2(12): "Customs Port means any port appointed under clause (a) of Section 7 to be a customs port and includes a place appointed under clause (aa) of that Section to be an inland container depot;" Section 7(a) of the Customs Act enables the Central Government, by notification in the Official Gazette, to appoint:-

(a) the ports and airports which alone shall be customs ports or customs airports for the unloading of imported goods and the loading of export goods or any class of such goods;"

8. It is admitted here that the Port at Chennai is a Port which has been notified under Section 7(a). That the imported newsprint was stored in that customs port which is also the customs station before clearance by the customs authorities is also not in dispute.

9. The crucial event for the purpose of Section 2 (ab) of theand consequently for Section 5(2) of theis the crossing the limits of the area of the customs station.

10. It was submitted by the learned counsel for the State, by placing reliance on the decision of the High Court at Andhra Pradesh, in the case of Minerals and Metals Trading Corporation of India Ltd. vs. State of Andhra Pradesh, 110 STC 394, that when goods are assessed to duty by the Customs Authorities after the bill of entry is filed the importation is completed even if the duty is not paid and the goods remain within the customs station. In that case the view taken was that irrespective of the fact whether duty is paid or not, as it is only after the Bill of Entry is filed and the import duty is assessed the goods can cross the limits of the Customs Station, transfer of documents of title before the clearance of the goods by the Customs authorities, but after the assessment of goods, would not amount to a sale in the course of import. It was held that after the assessment to duty is made after filing the Bill of Entry, the goods get mingled with the general mass of goods and merchandise in the country, and physical movement of goods out of the customs station, and the time at which the duty was paid would not be relevant.

11. With respect, we are unable to subscribe to the interpretation set out in that judgment, having regard to the plain language of Section 5(2) and Section 2(ab) of the Central Sales Tax Act.

12. As held by the Supreme Court in the case of Kiran Spinning Mills vs. Collector of Customs, (1999) 113 E.L.T. 753, which arose under the Additional duty of Excise (Textiles and Textiles Articles) Ordinance, the taxable event is the crossing of the customs barrier, and not the date when the goods had landed in India, or had entered the territorial waters. When goods are imported into India even after the goods are unloaded from the ship, and even after the goods are assessed to duty subsequent to the filing of a bill of entry, the goods cannot be regarded as having crossed the customs barrier until the duty is paid and the goods are brought out of the limits of the customs station. In the case of Kiran Spinning Mills, the apex Court has observed thus,

"In other words, the taxable event occurs when the Customs barrier is crossed. In the case of goods which are in the warehouse, the Customs barriers would be crossed when they are sought to be taken out of the Customs and brought to the mass of goods in the country."

13. Until such time as the duty payable on those goods is not paid, the amount of duty payable being determined with reference to the rate at which the duty was levied as on the date of the removal of the goods from the warehouse, the goods cannot be regarded as having crossed the Customs barrier of India.

14. Section 47 of the Customs Act refers to clearance of goods for home consumption, while Section 68 of thedeals with Clearance of warehoused goods for home consumption. In this case, the goods had been warehoused and the clearance for home consumption was made under Section 68, after the title to the goods had been transferred to the buyers. The duty was paid by the buyers.

15. The tribunal has in its order, placed reliance on the decision of the Supreme Court in the Case of Madras Marine & Co. vs. State of Madras (63 S.T.C. 169). The Tribunal has omitted to notice the caution set out in that judgment that the amendment introduced in Section 2 by the 103 of 1976 would have been relevant only if they were considering the case of sale by the transfer of documents of title to the goods as contemplated by Section 5 of the Central Sales Tax Act, but, that facts of the case before it did not involve a transfer of document of title to the goods, and therefore, the fact that the customs station itself was within the State of Tamil Nadu would not, on that score alone render all sale of goods which are in the course of import and awaiting clearance from that station, local sales.

16. The clearance referred to in Section 2 (ab) of the C.S.T. Act, in the absence of any other compelling factor has to be regarded as having reference to the clearance of goods for home consumption under Section 47 or the clearance of warehoused goods under Section 68 of the Customs Act. The clearance in this case, clearly was after the transfer of document of title and was not earlier. The crossing of the limits of the customs station took place after the clearance of the goods from the warehouse for home consumption.

17. The title having passed on to the buyer before such clearance and crossing, the sale effected by the assessee/dealer was clearly one which was in the course of import. The impugned order of the Tribunal upholding the denial of exemption to the dealer in respect of these sales is, therefore, unsustainable and is set aside. The Writ petitions are allowed.