TaxTMI 
TaxTMI 
2002 (5) TMI 714
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....e of pipe coating with an annual capacity of 125 kms. and the conditions attached to the permission provided that 50% of the production shall be physically exported and remaining 50% shall be supplied to ONGC/GAIL under Global Tendering Scheme. This permission was based upon the appellants' application dated 20-11-92. In May, 1993, the appellants were allowed to set up the unit in the Kandla Free Trade Zone and the Development Commissioner, KFTZ stated in the letter of permission that all the terms and conditions stipulated by the FIPB while approving the project as an 100% EOU would remain the same. Based on the above permission, the appellants executed an agreement with the Government of India in Nov., 1993, according to which the appellants could import capital goods, raw material, components etc. without payment of customs duty. In June, 1994, the Central Government issued Notification No. 133/94 granting exemption to machinery, raw materials, capital goods etc. imported into India for the production of goods for export out of India by units within the KFTZ. Based upon the permission and the agreement, the appellants imported capital goods, raw material, components, spares etc.....
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....in their submissions dated 29-1-98 where they have accepted that these pipes are to be utilised for conveying/transporting natural gas under water and hence are known as sub-marine pipelines. The parties have filed to point out and establish whether any percentage of the goods has actually been exported/used beyond the territorial waters of India. (b) The examination and scrutiny of Shipping Bills submitted by the parties reveal that the consignee in the S/Bills has been shown as Oil and Natural Gas Corporation Ltd., Maker Tower, Cuffe Parade, Bombay. The port of discharge in all the S/Bills place of delivery (if on carriage) has been mentioned as Bombay High but the party has not been able to substantiate that the goods were taken from the Port of discharge on carriage to any other place which can be counted as export. In fact, I have come across the correspondence letter D.O. No. MRBC/MSD/ENC/31/98, dated 30-1-98 which is written by Sri R.C. Gourh, Director (Technical), Oil and Natural Gas Corporation, Tel Bhavan, Dehradun to Member, Central Board of Excise and Customs, Ministry of Finance, Department of Revenue, New Delhi. In this letter, Director (Technical) ONGC writes, ....
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.... Ltd., a testing agency nominated by ONGC checked the pipes and thereafter the pipes were delivered to ONGC through laying contractor. These affidavits also clearly describe the length of pipes supplied by the appellants and the position where these pipes were laid by ONGC. After taking into account various factors, the Bench granted stay on 18-7-2001 and liberty was given to the respondent-Commissioner to file counter reply/affidavit in respect of the affidavits of ONGC. However, no reply or affidavit was filed by the Commissioner. Hence they stand unrebutted. 4. Coming to the details of coated pipes supplied to ONGC for ICP-Heera Project, the project consisted of : (a) laying of 30" dia pipeline from ICP platform to Heera Platform length of pipeline being 141.7 kms. (b) laying of 20" dia pipeline connecting a place called SHP platform to main ICP-Heera pipeline at a place called SL-3 PLEM location. Length of this connection pipeline is 11.2 kms. The entire pipeline laid was beyond the territorial waters of India and were non-designated areas during the period of delivery. All the coated pipes for the project was entirely su....
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....28-9-1994 (Vol. 3, page 434) after obtaining the opinion of the Ministry of Law, clarifying that if anything is brought into a place which is outside the designated areas, the same can be treated as imports. Conversely, if anything is supplied from India to the non-designated area, the same would be treated as 'export'. The above circular was again reiterated by the CBEC vide another circular No. 450/76/93-Cus. IV, dated 27-3-1995 (page 435, Vol. 3). In this circular, the CBEC also annexed the list of the designated areas. By a telex dated 31-5-1996 (page 397, Vol. 3) relating to this very case, CBEC specifically clarified in para 5 to the Commissioner of Customs, Kandla in response to the representation made by the appellants to the effect that supplies to ONGC installations beyond territorial waters and to non-designated areas constitute exports. The relevant extract of the Telex is as under : "(4) Regarding Export Obligation supply of goods to ONGC/GAIL against free foreign exchange and in terms of specific approvals given to the units by Board of Approval for such supply would count towards fulfilment of export obligation. (5) In addition, supplies to ONGC installat....
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....nd the limit of such zone is 200 nautical miles from the appropriate baseline. Sub-section (6) of Section 7 confers the power on the Central Government by way of notification in the Official Gazette to declare any area of the exclusive economic zone to be a designated area and make such provisions as it may deem necessary with respect to, inter alia, customs and other fiscal matters in relation to such designated areas. In exercise of the powers conferred under sub-section (5) of Section 6 and sub-section (6) of Section 7 of the Act, the Central Government issued a Notification S.O. 429(E), dated 8-7-1986 (Vol. 3, page 482). In this notification, the Central Government declared that the areas mentioned in the Schedule to the notification and falling within the continental shelf or the exclusive economic zone of India are designated areas for the purposes of the said sections. The Schedule to the notification indicated the name of the platforms at the Bombay High and the coordinates of the same. Thus, by virtue of this notification issued under the 1976 Act, even those areas which fell outside the territorial waters of India, being beyond 12 nautical miles from the appropriate basel....
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....ared and laid within India is well within the 25% DTA entitlement allowed under the policy as also under the Notfn. No. 133/94-Cus. This is also well within the permission granted by the Government in the letter of permission wherein the appellants were required to export 50% of the goods only. 9. Notification No. 133/94-Cus. grants complete exemption to capital goods etc. imported into India for manufacture of goods subject to the condition that the goods so manufactured are exported out of India. However, para 3 of the Notfn. No. 133/94-Cus. makes an exception. This para states that even if the goods are not exported out of India but are cleared within India in terms of policy, on payment of duty of excise, the customs notification will be still applicable to the capital goods etc. imported by the FTZ unit. The relevant portion of Notfn. No. 133/94-Cus. is extracted below : "3. Notwithstanding anything contained in the notification, the exemption contained herein shall also apply to the said goods which on importation into India are used for the purposes of production, manufacture, processing or packaging of articles in a unit in the Zone and such articles (including rejec....
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....lies constituted as deemed exports is refund of terminal excise duty. In other words, whatever excise duty is payable on the coated pipes supplied to ONGC by the appellants will be reimbursed by the Government. This is one of the grounds why the goods were assessed to Nil duty. In any case, customs duty cannot be denied to the imported goods on the ground that excise duty is payable on the finished goods cleared to DTA. 11. The finding that the pipes are lying in the Panvel stock yard of ONGC is beyond show cause notice and factually incorrect. The finding of the Commissioner in the impugned order by relying on the letter dated 30-1-98 written by CBEC is beyond the show cause notice. This evidence has not been referred to or relied in the show cause notices issued to the appellants. For the first time in the impugned order, this evidence has been cited without putting the appellants on notice. There is no evidence in the impugned order that the very coated pipes manufactured and supplied by the appellants were lying in the stock yard of ONGC. On this ground also, the impugned order alleging that the pipes are not exported and are lying in the stock yard is incorrect and not s....