TaxTMI 
TaxTMI 
2009 (11) TMI 745
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.... to fishing trawlers at a point beyond 24 nautical miles from the coast. SSCL and its associate firm M/s. Marine Plus also received such bunkers for their fishing trawlers and trawlers chartered by SSCL. These fishing trawlers being vessels on foreign run were eligible for receipt of bunkers free of import duty. It was found that during the period 22-11-2004 to 15-9-2007 vessels of SSCL that received mid-sea bunkers served as chase boats/guard vessels for survey vessels engaged in mineral oil exploration/production in the Exclusive Economic Zone (EEZ). Provisions of Customs Act applied in the EEZ and receipt of HSD of foreign origin by these vessels amounted to import exigible to customs duty. Investigations also revealed that SSCL had procured bills to show purchase of bunkers from dealers on the mainland without actually buying HSD. Documents were manipulated to show that these supplies had been received by fishing trawlers in the mid-sea. Records maintained by Visakhapatnam Port showed presence of several vessels at the port when the records of SSCL, namely Bunker Delivery Receipt (BDR), showed them to be engaged in fishing in deep sea. The stock of HSD with the dealers who sold....
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....rds of the Visakhapatnam Port Trust (VPT) it was found that fishing trawlers which were shown to be deployed in deep sea fishing and received bunkers in the mid-sea as per several Bunker Delivery Receipts were actually stationed at the fishing harbour, 13 such instances are noted in the impugned order. These BDRs contained particulars such as name of the barge bringing the HSD, name of the fishing trawler, quantity of bunker received, etc., signed both by the person in charge of the trawler receiving bunker, person in charge of the barge supplying bunker and countersigned by the representative of SSCL. The assessee had manipulated records to show that it had procured indigenous HSD for the movement of chase boats/guard vessels whereas the fuel consumed had been received duty free. The Exclusive Economic Zone (EEZ) and Continental Shelf came under the jurisdiction of the Act and Customs Tariff Act, 1975. Therefore, import of any goods into this area was exigible to import duty. Fishing trawlers deployed in the Indian territorial waters were not foreign going vessels. These vessels were deployed within territorial waters of India (in the EEZ) in connection with mineral oil extraction....
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....ned bunkers arose not at the time of its receipt but during consumption in operations other than fishing activities. These vessels ceased to be foreign going vessels once they returned to the shore and travelled between EEZ and the coast. As the appellants had not complied with the procedure prescribed by the Commissioner of Customs, Visakhapatnam relating to issue of fishing permission/passes, the Commissioner was competent to demand duty on the fuel consumed by the trawlers during their coastal run i.e. from harbour to EEZ and back. In the instant case, the offence occurred at the fishing harbour of Visakhapatnam; the vessels left Visakhapatnam for EEZ to attend chase boat activities without accounting the duty free bunkers on board the vessel and without surrendering the fishing passes to customs authorities. Hence, the offence involved had occurred in the jurisdiction of Visakhapatnam Customs House. The jurisdiction of Visakhapatnam Customs House at the material period covered the entire area of port trust, airport, municipal limit of Visakhapatnam and Visakhapatnam Special Economic Zone. The Commissioner rejected appellants' reliance on the case of M/s. Noble Asset Company Ltd....
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....9 and granted by the Government of India or any State Government to the Oil and Natural Gas Corporation or Oil India Limited on nomination basis. Sl. No. 216 - Goods specified in List 12 required in connection with petroleum operations undertaken under specified contracts. Sl. No. 217 - Goods specified in List 12 required in connection with petroleum operations undertaken under specified contracts under the New Exploration Licensing Policy. As per the Notification, goods specified in list 12 required in connection with petroleum operations under petroleum exploration licenses or mining licenses are eligible for import. Sl. No. 1 and 24 of list 12 read as under :- Sl. No. 1 - Land Seismic Survey Equipment and accessories, requisite vehicles including those for carrying the equipment, seismic survey vessels, global positioning system and accessories, and other materials required for seismic work or other types of Geophysical and Geochemical surveys for onshore and offshore activities. Sl. No. 24 - Sub-assemblies, tools, accessories, stores, spares, materials, supplies, consumables for running, repairing or maintenance of the goods specified in this List. In the inst....
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....goods reach the customs barriers and the bill of entry for home consumption is filed." 3.3 It is submitted that HSD had not been unloaded but was used only as fuel for running of the vessels. The goods had not been unloaded on the landmass of India to constitute import exigible to customs duty. Such use of fuel by the chase boats did not involve import or attracted liability to customs duty. During fishing in the deep sea and during chase boat/guard vessel operations, they were outside the territorial waters of India. As per Section 2(21)(ii) of the Act, any vessel engaged in fishing or any other operations outside the territorial waters of India was a foreign going vessel. Moreover under Section 87 of the Act, any stores on board a vessel on foreign run could be consumed without payment of customs duty. The impugned fuel had not been imported into India but consumed as stores during its operations outside the territorial waters of India. The Public Notice No. 172/2002, dated 27-8-2002 could not levy duty of customs when there was no import. Failure to follow the fishing pass procedure could not be held as the ground for demand of duty. 3.4 As per Notification No. 1....
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....The Commissioner also found that the records maintained by VPT and the statements rendered by different dealers of diesel oil showed that a quantity of 166.500 KL (143.02 MTs) shown to have been purchased by the appellants from petrol bunks on the mainland had actually been received as bunkers from abroad and used for plying chase boats. This quantity of diesel oil also was not entitled to exemption under Notification No. 21/2002. Accordingly, he confirmed demand of Rs. 29,43,805/-, confiscated the impugned goods and ordered fine of Rs. 9 lakhs, imposed equal penalty on SSCL and imposed penalty of Rs. 2 lakhs on Managing Director of SSCL under Section 112(a) of the Act. 4.1 We find that the Commissioner held that the EEZ was part of Indian territory and the Act applied as regards the activity of petroleum exploration/production and therefore fuel consumed in connection with such activities was import into India and duty was chargeable. In holding this view, the Commissioner relied on the judgment of the Apex Court in M/s. Aban Loyd Chiles Offshore Ltd. case (supra). The Commissioner held that the liability to duty on the impugned fuel arose at the time of its consumption du....
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....of Customs, Visakhapatnam has no jurisdiction to demand duty on such oil. In the Garden Silk Mills case, what was held was that import of goods commenced when the goods entered territorial waters and completed when Bill of Entry was filed for home consumption of those goods. We cannot hold following the ratio of Garden Silk Mills (supra) that HSD brought to the Visakhapatnam port and in respect of which no statutory formalities had been followed are not imported goods. 500 KL (179.961 MTs) of HSD of foreign origin had reached Visakhapatnam port as bunkers in stock onboard the fishing trawlers. No exemption is admissible to such imported oil as no customs formalities were followed or conditions of the exemption notification claimed fulfilled. In respect of this quantity the Commissioner quantified the demand and applicable interest. As regards the quantity received in the mid-sea beyond 12 nautical miles and consumed in chase boat activity or in fishing, the Commissioner, Visakhapatnam does not have jurisdiction to demand duty. 4.3 We find that the appellants have assailed the proposals at different stages of proceedings on different grounds; that they had not used the trawl....