Custom, Excise & Service Tax Tribunal
B.G.Exploration & Production(I)Ltd vs Commissioner Of Customs ... on 30 July, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO.II
APPEAL NO.C/85071 & 85122/13-Mum
(Arising out of Order-in- Original No.C.A.O. No.57/2012/CAC/CC(I)AB/Gr.VB dtd. 25.09.2012 passed by the Commissioner of Customs, Mumbai)
For approval and signature:
Honble Mr Ashok Jindal, Member(Judicial)
Honble Mr.S.K.Gaule, Member(Technical)
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1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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B.G.Exploration & Production(I)Ltd.
Amir Salman
:
Appellants
VS
Commissioner of Customs (Import),Mumbai
Respondent
Appearance
Shri Vipinkumar Jain, advocate with Shri Krishna Kumar & Ms.M.Bhardwaj, Advocates for Appellants Shri K.M.Mondal, Spl.Counsel for Respondent CORAM:
Mr. Ashok Jindal, Member(Judicial) Mr. S.K.Gaule, Member(Technical) Date of hearing: 30/7/2013 Date of decision 30/07/2013 ORDER NO.
Per : Ashok Jindal The appellants are in appeals against the impugned order wherein duty demand of Rs. 5,40,88,924/- has been confirmed alongwith interest and equivalent amount of penalty as been imposed under Sec.114A of the Customs Act. Redemption fine of Rs. 5 crores in lieu of confiscation under Sec.125(1) of the Customs Act was also imposed. A penalty of Rs. 5 lakhs was imposed on Shri Amir Salman, Import Manager of the firm under Sec.112(a) of the Act.
2. Brief facts of the case are that the applicant had imported self propelled Tug Smit Jaguar, year Built 2009 with NASSAU Registry and claimed exemption under Notification No.21/2002 dt. 01.03.2002 at Sl. No.216, List No.12 and condition Sr. No. 31. As per the condition of the Notification claimed by the applicant, the applicant is entitled to import the said vessel into India in connection with petroleum operations under specified contract. As per the condition No.31, the importer was required to obtain a Certificate from a duly authorized officer of the Director General of Hydrocarbons, in the Ministry of Petroleum and Natural Gas, Govt. of India to the effect that the imported goods are required for petroleum operations referred to in Clause (a) and have been imported under the contract referred to in that clause. The goods were cleared and exemption was granted. The applicant also executed a bond for Re-export after completion of the contract period. On an investigation, it was found that the vessel was used for other than the petroleum operations i.e. for salvage operation in the Mumbai Port for a period of 22 days from 10th August 2010 to 2nd September 2010. The department was of the view that as the applicant has violated the condition of the Notification that the imported vessel has to be used only for petroleum operations therefore, they are not entitled to the benefit of Notification 21/2002 at Sl.No.216. Accordingly, the impugned order has been passed
3. Aggrieved by the said order the appellants are before us.
4. Shri Vipinkumar Jain, the ld.counsel for the appellants appeared before us and submits that there is no dispute that the impugned vessel is imported duty free by claiming exemption in terms of Notification No.21/2002-Cus dated 1.3.2002 (sr.No.216) wherein the condition of production of essentiality certificate issued by the Directorate General of Hydrocarbons for the intended purpose of petroleum operation in the Panna-Mukta Oil Fields on the west cost of India was complied with and it is also not disputed that after importation, the same was put to use for the intended purpose. The only dispute arose is that during the currency of the contract the vessel was diverted into the service of the salvage operation of MSC Chitra in the Mumbai Harbour for a period of 22 days from 10.8.2010 to 02.09.2010 without any prior intimation to the customs authorities who granted duty free benefit to the vessel under the above notification. It is further submitted that as the above said notification does not attach any post-importation or end-use condition, therefore, there is no breach of any condition of the notification. Consequently the benefit of the notification cannot be denied. He also relied on the decision of the Tribunal in the case of Clough Engineering Ltd. -2006(198) ELT 457 wherein the Tribunal dealt with the same entry of the Notification and granted the benefit of the notification despite the fact that some excess quantity of C.S.Pipes intended for petroleum operation were diverted in the local market and the said decision was affirmed by the Honble Apex Court as reported in 2006(202) ElT A 59 (SC). He further submits that in the impugned order the ld.Commissioner has relied on the decision of the Tribunal in the case of King Rotors & Air Charter P.Ltd. 2011(269)ELT 347 which is not applicable to the facts of this case as in that case the assessee had to file an undertaking that the Hilicoper would be used for providing non-scheduled passenger services, which is not the case in hand. Therefore, the said decision cannot be relied upon.
5. On the other hand, Shri K.M.Mondal, Special Counsel for the Revenue submits that on careful reading of sr.no.216 of the notification and condition 31 attached to it, it may be seen that exemption is given to the goods specified in list 12 required in connection with petroleum operations undertaken under specific contract subject to fulfillment of condition no.31. Therefore, the exemption will not be available to the goods if the same are required for salvage operation or used for salvage operation and that too for monetary consideration as found by the Commissioner. He further submits that post importation condition or end-use condition is inbuilt in the relevant entry itself, therefore, the condition of the notification is clearly breached. Consequently, the benefit of the Notification is not available and same condition was in the case of King Rotors & Air Chapter P.Ltd. (supra) thefore, the ld.Commissioner has rightly denied the benefit of the Notification to the appellants.
6. Considered the submissions made by both sides. We find that the issue relates to the grant of benefit of Notification No.21/2002-Cus dated 1.3.2002. sl..no.216. The relevant entry is reproduced below:- :
Sr.no.216
Chapter or heading No or sub heading no.
84 or any other Chapter Description of goods Goods specified in List 12 required in connection with petroleum operations undertaken under specific contract.
Standard rate Nil Additional rate Nil Condition No. 31
7. On careful consideration of the condition attached to the Notification it is clear that the appellant is required to produce a certificate from a duly authorized officer of the Directorate General of Hydrocarbons in the Ministry of Petroleum and Natural Gas, Government of India, to the effect that the imported goods are required for petroleum operations and it is not in dispute that the vessel imported was used for intended purpose. It is also an admitted fact that during the period of contract, the vessel was used for salvage purpose but it does not mean that the vessel was not used for intended purpose. The facts of the case in the case of Clough Engineering Ltd. supra are applicable to the facts of the case in hand wherein this tribunal granted the benefit of the notification despite the fact that the excess quantity of C.S. Pipes intended for petroleum operation was diverted in the local market. In fact, in that case this tribunal relied upon the decision in the case of State of Haryana vs.Dalmia Dadra Cement Ltd. -2004(178) ELT 13 (S.C.) and observed that the Apex Court held that the expression for use occurring in Section 5(2)(a)(iv) of the Punjab General Sales Tax Act ,must mean intended for use and that, if the intention of the legislature was to limit the exemption from sales tax by deduction from taxable turnover, only to such goods sold .. goods used. The court held that the mere fact that some of the cement supplied to the Punjab State Electricity Board on the basis of certificates issued by the Board to the effect the cement was required for use in the generation or distribution of electrical energy, was used by the Board for activities not directly connected activities therewith cannot make any different regarding the availability of the exemption. Further in the case of National Organic Chemical Industries Ltd. vs. CC(Import), Mumbai 2000(126) ELT 1072, while interpreting the Notification No.158/76-Cus which exempts raw naphtha intended for use in the manufacture of petrochemicals and extending the benefit thereunder to the quantity of raw naphtha which had evaporated and hence not consumed in the manufacture of petrochemicals, it was held that when the goods are imported and consumed for intended use then they are entitled for exemption under the above said notification sl.no.216. The said order has been affirmed by the Honble Apex Court. We further find that the facts of the case in King Rotors & Air Charter P.Ltd. are not applicable to the facts of this case as in that case as per the condition of the said Notification the assessee was required to file an undertaking for a particular use of the Hilicopter. Admittedly, the appellants have not given any undertaking to the department for exclusive use for petroleum operations. Therefore, the decision of King Rotors & Air Charter P.Ltd. is not applicable to the facts of this case.
8. As the facts in the case of Clough Engineering Ltd. (supra) are applicable to the facts of this case, as the vessel imported by the appellants is for intended use in petroleum operations and the same was used for that purpose therefore, the appellants are entitled for exemption although the said vessel was used for salvage operations for the period of 22 days. With these observations, the impugned order is set aside and the appeals are allowed with consequential relief, if any.
8. Appeals are allowed.
(Dictated in chamber) S.K.Gaule Member(Technical) Ashok Jindal Member(Judicial) pv 8