Ship's and Aircraft Stores

In one line

Stores are the goods a vessel or aircraft needs for its own operation, and the Act lets them be carried, warehoused and consumed without duty so long as they are not landed. Precisely: section 85 allows stores to be warehoused without assessment; section 86 permits their transit and transhipment; section 87 allows imported stores to be consumed on board a foreign-going vessel or aircraft; section 88 applies section 69 and Chapter X to stores; section 89 makes stores free of export duty; and section 90 gives concessions for imported stores for the Navy.

Why stores are treated apart

Because a ship is not a place in India for the purpose of consumption. Fuel burnt on a voyage from Mumbai to Dubai, food eaten by the crew at sea, spare parts fitted in the engine room: none of that is consumed in the Indian economy, and taxing it would simply drive bunkering and provisioning to a foreign port.

"Stores" is defined in section 2(38) as goods for use in a vessel or aircraft, and includes fuel and spare parts and other articles of equipment, whether or not for immediate fitting.

The commercial stake is a fair critical observation. Bunker fuel is a large trade and a port that taxes it loses the business to a neighbouring one, so the concession is competitive necessity as much as principle. The corresponding risk is diversion, since untaxed fuel and untaxed liquor on a vessel alongside an Indian quay are attractive goods, and the chapter's conditions exist to control it.

The provisions

Section 85, stores may be allowed to be warehoused without assessment to duty. Where any imported goods are entered for warehousing and the importer makes and subscribes to a declaration that the goods are to be supplied as stores to vessels or aircraft without payment of import duty under the chapter, the proper officer may permit the goods to be warehoused without the goods being assessed to duty.

The point of section 85 is that assessment itself is deferred, not merely payment. Ordinary warehousing under Chapter IX assesses the goods and defers the duty; here the officer may allow the goods in without assessing them at all, because the expectation is that they will never be dutiable.

Section 86, transit and transhipment of stores. Section 86(1) provides that any stores imported in a vessel or aircraft may, without payment of duty, remain on board such vessel or aircraft while it is in India.

Section 86(2) provides that 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 as provided in section 87 or section 90.