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Showing contexts for: essentiality certificate in M/S. Swiber Offshore Construction Pvt. ... vs Commissioner Of Customs on 27 June, 2014Matching Fragments
5. Heard both sides.
6. The learned Counsel appearing on behalf of the appellants submits that the Notification 21/2002-Cus dated 01.03.2002 does not make any reference to value. The value of the goods is not a condition governing entitlement to exemption under the said Notification. In fact, what is required to be ascertained to get the exemption is the essentiality of the item in question for the use in petroleum operations referred to therein. For that the DGH certified, unequivocally, that the barge imported by the appellant was essentially required for use in the said petroleum operations and there is no allegation against the appellant that the said barge was not so essentially required. Therefore, the essentiality certificate issued by DGH cannot be disputed. It is further submitted that after completion of the assigned work of petroleum operations the barge was re-exported. The rejection of essentiality certificate issued by DGH by the adjudicating authority merely on the ground that the value shown in the essentiality certificate is not as per the insurance cover. There was no allegation that the value of the goods was one of the considerations which governed issuance of the Essentiality Certificate in the said Notification. Therefore, even if the value shown in the Essentiality Certificate issued by the DGH was less than its true value, the denial of exemption benefit is not justified. As the licencing authority issued the essentiality certificate has not charged against the appellant that they have obtained the Essentiality Certificate by mis-representation. Thus, the learned Counsel submits that the impugned order is without jurisdiction. To support her contention, the learned Counsel relied on the decision of the Honble Supreme Court in the case of Systems Pvt. Ltd. v. C.C. 2003 (151) ELT 254 (SC). It is further submitted that the essentiality certificate pertains to the vessel Swiber Victorious which is mentioned on the face of the essentiality certificate. Therefore, it cannot be said by any stretch of means that the essentiality certificate does not relate to the subject barge. Once the eligibility certificate has been issued to the appellants for exemption, the issue of valuation of barge ceases to have any relevance or significance whatsoever as held by the Honble Apex Court in the case of CCE v. Wander Ltd., - 2003 (157) ELT 3 (SC).
7. On the other hand, the learned Spl. Counsel for the Revenue opposed the contentions of the learned Counsel and submits that the controversy in the matter is whether the Essentiality Certificate in question is relates to the Barge or not? The Essentiality Certificate submitted at the time of clearance of Barge was not relatable to the Barge in question inasmuch as the value of US$ 23.5 millions mentioned in the said certificate did not tally with its actual value which is US$ 42.5 millions. To support this contention, the adjudicating authority has relied on the invoice issued on the following evidences:-
8. Considered the submissions made by both the sides.
9. In this case, the appellant imported one Barge and filed Bill of Entry on 18.01.2011 for import on re-export basis claiming benefit of exemption under Sl.241 of Notification 21/2002-Cus dated 01.03.2002. The said notification gives exemption on production of Essentiality Certificate issued by the DGH certifying the fact that the said barge is required for petroleum operations under petroleum exploration licences issued to the ONGC. The appellant has obtained the said essentiality certificate from the DGH which shows that the name of the barge in question as Swiber Victorious. The learned Commissioner has held that the essentiality certificate produced by the appellant does not pertains to the barge is totally erroneous as the certificate mentioned the Swiber Victorious as barge in question. The only reason for denying the benefit of notification is that the value of the barge as shown in the invoice does not match to the value shown in the Insurance cover and the invoice issued by M/S. SEL on 17.3.2009. The finding of the learned Commissioner in the adjudication order does not say that the certificate does not belong to the impugned barge. Further, we find that the value taken by the learned Commissioner in the impugned order on the basis of invoice issued by Swiber Engineering Ltd. to VLCC on 21.03.2009 showing the value of the impugned barge is USD 42.5 M. In fact, the said price is not a commercial price. It is only an invoice raised in the name of the subsidiary which is having 100% holding, therefore, the transaction between them cannot be considered as assessable value to determine the assessable value under Section 14 of the Customs Act, 1962. Further, the invoice was raised in March 2009 whereas the import of the barge took place by Bill of Entry filed on 18.01.2011. Therefore, the said price have no relevance to the imports made in 2011. Another corroborative evidence adduced by the learned Commissioner in the adjudication order is that the insurance cover showing the price of the barge for insurance parties is 42.5 M. In fact, as per the agreement it is clearly instructed to the appellant that insurance cover has to be obtained on the said value for recovery of risks for other reasons. Moreover, the insured value is not the market value as held by this Tribunal in the case of Orient Enterprises (supra) which has been upheld by the Honble Apex Court. Therefore, reliance on the documents namely invoice issued in 2009 and the insurance cover for insurance of the impugned barge are not the evidences to determine the assessable value. We further find that in this case the adjudicating authority has not relied on any other evidence for enhancing the declared value. Therefore, the value declared by the appellant in their bill of entry is really a transaction value and the same cannot be rejected without any supporting evidence. We also find that the appellant produced a certificate issued by Chartered Engineers dated 31.12.2010 certifying the value of the barge is US $ 23.5 Million. The said evidence has not been discarded by the adjudicating authority. Further, the appellant has also produced a quotation to know the price of new identical barge and it shows that the new barge will cost USD 25 Million from the manufacturer. This evidence has also been discarded by the adjudicating authority. If the new barge is available on US$ 25 Million at relevant time, as the impugned barge is a old one therefore the declared value of US$ 23.5 Million is required to be accepted by all means. We further find that the DGH has not raised the issue of value for issuance of the said essentiality certificate therefore, the certificate issued by DGH cannot be discarded by the adjudicating authority.
11. The essentiality certificate issued for the barge in question is for Swiber Victorious therefore, the impugned order quo rejecting the essentiality certificate is set aside. As the value declared by the appellant is USD 23.5 Million is true and correct value therefore, we hold that the appellant is entitled for the benefit of exemption at Sl. No.214 of Notification No. 21/2002 dated 01.03.2002.
12. With these observations, we set aside the impugned order and the appeals are allowed with consequential relief, if any. Stay application is also disposed of in the above terms.