2016 (11) TMI 170 - AT - Customs

Tribunal classifies Marine Gas Oil under specific tariff entry, granting Customs duty exemption

The Tribunal ruled in favor of the appellant, classifying the imported Marine Gas Oil (MGO) under the residuary tariff entry 271001990 instead of ... Demand - import of Marine Gas Oil (MGO) - denial of benefit of exemption under N/N. 21/2002-Cus - the certificate of DGHC issued for duty-free import was for Marine Gas Oil whereas the goods imported was Light Diesel oil (LDO) - Held that: - reliance placed on the decision of the case of Transocean Discoverer 534 LLC [2015 (7) TMI 816 - CESTAT BANGALORE] where it was held that what was imported was Marine Gas Oil and not Light Diesel Oil and hence the benefit of exemption under CN 21/2002, Sl.No.217, against the Essentiality Certificate issued by the Directorate General of Hydrocarbons, will be available to said Marine Gas Oil - appeal allowed - decided in favor of appellant. Issues: Classification of imported item, applicability of exemption under Notification No. 21/2002-Cus, conformity to BIS specification, relevance of test reports, interpretation of certificates issued by Directorate General of Hydrocarbons.Classification of Imported Item:The appellant, an oil field services company, imported Marine Gas Oil (MGO) for its petroleum operations. The Department classified the imported item as High-Speed Diesel (HSD) Oil under CTH 27101930, leading to a duty payable assessment. The appellant contended that MGO should be classified under the residuary tariff entry 271001990 as per ISO:8217 standards applicable to Marine Distillate Fuel DMA. The Tribunal agreed with the appellant's classification, citing the necessity of re-exporting the vessel after exploration activities and the requirement for MGO for vessel operations.Applicability of Exemption Under Notification No. 21/2002-Cus:The appellant availed exemption from Customs duty under Notification No. 21/2002-Cus for the imported consumables based on certificates from the Directorate General of Hydrocarbons. The Department denied the exemption, citing discrepancies between the certificate specifying MGO and the test report indicating Light Diesel Oil (LDO). However, the Tribunal ruled in favor of the appellant, emphasizing that the imported item was indeed MGO, as per the standards, and thus eligible for the exemption.Conformity to BIS Specification and Relevance of Test Reports:The test report on the imported goods suggested characteristics of LDO, contrary to the appellant's claim of importing MGO. The Tribunal noted that the Chemical Examiner's report did not specifically state that the product was not MGO, leading to a lack of evidence supporting the Department's classification as LDO. The Tribunal highlighted the importance of adherence to Indian Standards for MGO and concluded that the appellant met the parameters for MGO import.Interpretation of Certificates Issued by Directorate General of Hydrocarbons:Certificates from the Directorate General of Hydrocarbons certified the necessity of consumables for petroleum operations, supporting the appellant's claim for duty-free import. The Department questioned the validity of the certificates based on the test report results. However, the Tribunal upheld the certificates' validity, emphasizing that the imported MGO was essential for the petroleum operations as confirmed by the certificates.In conclusion, the Tribunal allowed the appeal, acknowledging the appellant's compliance with MGO standards and eligibility for duty exemption under Notification No. 21/2002-Cus. The judgment aligned with previous decisions on similar cases, emphasizing the importance of accurate classification, adherence to standards, and the validity of supporting certificates in customs disputes.