Transit & Transhipment of Stores [Section 86 and 87]:
Section 86 of the Customs Act provides that
1. Any stores imported in a vessel or aircraft, may remain on board such vessel or aircraft, without payment of duty, while it is in India. (Transit)
2. Any stores imported in a vessel or aircraft may, with the permission of the proper officer be transferred to any vessel or aircraft as stores for consumption therein. (Transhipment)
No duty on consumption of stores on board a foreign going vessel/aircraft [Section 87]:
Therefore, when a foreign going vessel or aircraft enters territorial water, sub-section (i) of section 86 permits the stores on board such vessel or aircraft to remain on board without payment of duty during its stay in Indian waters.
Again, in transhipment cases, when such stores are transferred to any foreign going vessel or aircraft or to an Indian naval vessel for consumption, they are permitted to do so without payment of any duty vide sub-section (2) of this section.
Section 87 of the Customs Act provides that any imported stores on board a vessel or aircraft (other than stores to which section 90 applies) may, without payment of duty, be consumed during the period such vessel or aircraft is a foreign going vessel or aircraft.
This covers the situation between the first Indian port/airport of arrival to the final Indian port/airport of departure to a destination outside India.
In other words, no duty is leviable as long as the vessel/aircraft is a foreign going vessel/ aircraft. However, if the vessel/aircraft ceases to be so and converts to a total run/local flight , duty will be chargeable on the stores on board.
As a result of these two specific provisions of law, it follows that in other cases normal law of levy and assessment to import duty would apply. Thus, in the case of:
(i) vessels/aircraft arriving in India and terminating their voyage at the port of arrival:
(ii) vessel/aircraft arriving in India and subsequently converting into coastal voyage/run or domestic flight import duty would be chargeable on the unconsumed stores brought by the vessel/aircraft/conveyance at the point of its entry into India. The stores list in the import manifest forms the basic document for determination of duty liability.