Customs Act, 1962 Section 86 — Transit and transhipment of stores
Customs Act, 1962 · Transit and transhipment of stores
Plain-English Explanation
Overview
Section 86 of the Customs Act, 1962, deals with the transit and transhipment of stores imported on vessels or aircraft. It allows these stores to remain on board without duty payment or to be transferred to another vessel/aircraft with permission, facilitating efficient operation of international transport. This section prevents unnecessary customs duty levies on items not intended for Indian consumption but crucial for the operation of foreign vessels and aircraft while within Indian territory.
Who Does This Apply To?
This section applies primarily to:
- Shipping companies and airlines operating international routes that import stores (provisions, fuel, etc.) on their vessels or aircraft.
- Customs officers responsible for regulating the movement of goods, including stores, within Indian customs territory.
- Importers who bring these stores into India on vessels or aircraft.
How It Works
The section operates in two main parts:
- Stores Remaining on Board:
- Any stores (provisions, fuel, spare parts, etc.) imported on a vessel or aircraft can remain on board without payment of duty while the vessel or aircraft is within Indian jurisdiction. This applies to stores intended for use during the continuation of the voyage or flight, not for offloading and consumption within India.
- Transfer of Stores:
- Stores can be transferred from one vessel or aircraft to another vessel or aircraft. This transfer requires permission from the proper officer (a Customs official).
- The transfer must be for consumption as stores on the recipient vessel or aircraft, as provided for under Sections 87 or 90 of the Customs Act, 1962. These sections outline specific rules and procedures regarding the use and accounting of stores.
Important Conditions & Exceptions
- Condition 1: The stores must be genuinely intended for use on board the vessel or aircraft. Any attempt to divert the stores for consumption or sale within India would be a violation of the Act.
- Condition 2: The transfer of stores from one vessel/aircraft to another requires prior permission from the proper officer. This ensures customs authorities have oversight and can prevent misuse.
- Exception: If the stores are landed in India (i.e. removed from the vessel or aircraft), they are subject to the standard customs duties and procedures applicable to imported goods, unless specifically exempted under another provision of the Act.
Practical Example
An international cargo vessel, "MV Global Trader," arrives at Mumbai port with 10,000 liters of fuel oil and 500 kg of provisions as stores. The vessel needs to take on an additional 2,000 liters of fuel oil for its journey to Singapore. The initial 10,000 liters and the 500kg of provisions can remain on board without any customs duty being paid, as they are intended for use during the vessel's voyage. If, however, 1,000 liters of the fuel are to be transferred to another vessel docked nearby for its onward journey, the shipping company must obtain permission from the proper officer. This transfer is allowed without duty, as the transferred fuel is intended for use as stores on the second vessel.
Key Amendments
No major amendments since enactment.
No case laws found for this provision yet.
Browse all case laws →Frequently Asked Questions
What does Section 86 of the Customs Act, 1962, cover concerning transit and transhipment of stores?
Section 86 of the Customs Act, 1962, deals with the handling of 'stores' (goods for consumption by crew or passengers) imported in a vessel or aircraft. It allows such stores to remain on board without duty payment while the vessel or aircraft is in India. Additionally, it permits the transfer of these stores to another vessel or aircraft with the proper officer's permission, as detailed in Sections 87 and 90, for consumption as stores on the latter.
Is customs duty payable on stores that remain on board a vessel or aircraft under Section 86(1) of the Customs Act, 1962?
No, Section 86(1) specifically states that any stores imported in a vessel or aircraft may remain on board such vessel or aircraft while it is in India *without payment of duty*. This exemption applies as long as the stores remain on the original vessel or aircraft.
Under what conditions can stores be transferred between vessels or aircraft according to Section 86(2) of the Customs Act, 1962?
Section 86(2) stipulates that stores can be transferred from one vessel or aircraft to another, but only *with the permission of the proper officer*. Furthermore, the transfer must be for the purpose of the transferred stores being consumed on the recipient vessel or aircraft, and such consumption is governed by Sections 87 or 90 of the Act.
What happens if stores are transferred between vessels or aircraft without the 'proper officer's' permission, violating Section 86(2)?
Transferring stores without the 'proper officer's' permission is a violation of the Customs Act, 1962. It can lead to penalties, including fines and potential seizure of the stores. The specific penalty would depend on the nature and value of the stores, and the intent behind the unauthorized transfer, as determined by customs authorities.
Does Section 86 specify any time limits for stores remaining on board a vessel or aircraft?
Section 86 does not explicitly state any time limits for stores remaining on board. The permission to remain on board without duty applies 'while it is in India'. Practically, this implies the duration the vessel or aircraft is legally permitted to be within Indian territorial waters or airspace.
Are there any specific regulations or notifications that provide further clarity or amplify the provisions of Section 86 regarding the transit and transhipment of stores?
Yes, while Section 86 provides the basic framework, relevant Circulars and Notifications issued by the CBIC (Central Board of Indirect Taxes and Customs) often clarify specific procedures and documentation requirements for transit and transhipment of stores. Taxpayers should consult the latest CBIC communications for detailed guidance.
How does Section 86 relate to Sections 87 and 90 of the Customs Act, 1962?
Section 86(2) explicitly refers to Sections 87 and 90, indicating that the consumption of stores transferred to another vessel or aircraft must align with the provisions laid down in these sections. Sections 87 and 90 likely outline the rules and conditions governing the use and accounting of stores on board vessels and aircraft. Therefore, Section 86 provides the permission for transfer, while Sections 87 and 90 govern the subsequent use.
Key Conditions & Requirements
| Condition | Details |
|---|---|
| Duty exemption for stores on board vessels/aircraft | Stores imported in a vessel or aircraft can remain on board in India without payment of duty as long as they stay on the same vessel or aircraft. |
| Transfer requires permission from proper officer | Transferring stores from one vessel/aircraft to another requires explicit permission from the proper officer. |
| Stores for consumption as per sections 87/90 | Transferred stores must be intended for consumption on the receiving vessel/aircraft as per the provisions outlined in sections 87 or 90. |
| No specific time limit for stores to remain on board | There appears to be no specified time limit for stores to remain on the original vessel/aircraft while in India, implying indefinite storage provided they remain on board. |
Amendment History
No amendment records available for this provision.
Customs Act, 1962 Section 86 — Transit and transhipment of stores