Territorial jurisdiction limits Customs demands over bunker consumption in the Exclusive Economic Zone, leaving notices and penalties unsustainable.

Customs jurisdiction did not extend to the Exclusive Economic Zone for bunker consumption by fishing trawlers operating beyond territorial waters, so the show cause notices, duty confirmations and penalties issued by the customs authorities at Visakhapatnam were unsustainable. Following its earlier decision on identical facts, CESTAT held that the officer lacked territorial jurisdiction over the impugned demands and therefore did not examine the remaining objections on merits. The assessee succeeded on the jurisdictional ground.

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Issues: Whether the Customs authorities at Visakhapatnam had jurisdiction to issue the show cause notices, confirm duty and impose penalties in respect of bunker consumption by fishing trawlers operating in the Exclusive Economic Zone, and whether the impugned demands could therefore be sustained.

Analysis: The Tribunal followed its earlier decision on identical facts and held that the jurisdiction of the Commissioner of Customs, Visakhapatnam did not extend to the Exclusive Economic Zone. Since the demand related to bunkers received and consumed by vessels operating beyond the territorial waters in that zone, the authority issuing the notices and confirming the demands lacked territorial jurisdiction. In view of that finding, the Tribunal did not go into the other substantive objections on merits.

Conclusion: The Customs authorities had no jurisdiction to issue the notices or sustain the demands in these matters, and the assessee succeeded.

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