TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 523
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....filed per Mighty Servant-2; Customs department too did not insist on filing of Bill of entry in respect of Rig Trident-II; the said rig was engaged in operations from May 1988 to Jan 1998 under Contract with ONGC; from January 1998 to November 1998under contract with Enron and from December 1998 again under Contract with ONGC. A Show Cause Notice dated 8th July 1999 was issued to the Appellants proposing confiscation of the Rig Trident-II under Section 111 of the Customs Act 1962 mainly on the ground that bill of entry was not filed. 2. Commissioner confiscated the Rig Trident-II under Section 111 while giving option to redeem the same on payment of Redemption of Rs. 15 Crores and imposing penalty of Rs. 5 Crores. This Tribunal, vide Order dated 27-3-2000, ordered pre- deposit of Rs. 3 Crores and furnishing of Bank of Guarantee of Rs. 50 Crores. Tribunal, vide final Order dated 2-2-2001, reduced the fine to Rs. 25 Lakhs and penalty to Rs. 5 Lakhs. Tribunal, while denying the benefit of exemption, held that it is open to the importer to pursue the claim. Both the Appeals, by the Appellants as well as the department, against the Tribunal's Order dated 2-2-2001 were admitted by....
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....e the Appellants' claim for exemption from duty and consequential refund. Bombay High Court disposed off Writ PetitionNo.481 of 2001, vide Order dated 22-3-2006, directing the Assistant Commissioner to examine the Appellants' claim for exemption based on the Essentiality Certificate and finalize the assessment of the Bill of Entry. In view of the High Court Order, the Commissioner (Appeals) also, vide Order dated 31-5-2006, remanded the matter to the Assistant Commissioner. 5. Director General of Hydro-Carbons, extended the validity of the Essentiality Certificate for a period of one year from 8-8- 2006. Ministry of Petroleum and Natural Gas, vide letter dated 26th July 2006, clarified that since the Empowered Committee under Notification No.516/86 had ceased to exist, the Ministry of Petroleum and natural gas had examined the case in consultation with IFD (Integrated Finance Division) who had approved the issue of EC on ex-post facto basis. It was also pointed out that such EC had been issued in the past also and there was no irregularity in issuance of such EC on ex-post facto basis. Assistant Commissioner, vide order dated 6-10-2006, rejected the Appellants' claim for exe....
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....e was issued, 11 years after the import, in July 1999; i.e. and it would be totally unjust to deny the exemption on the ground that Essentiality Certificate was obtained after the rescission of the notification in December 1988. He submits that the Principal Bench of the Tribunal, in the case of Jagson International Ltd. v CC 2006 (199) ELT 553, held that though essentiality certificate, under Notification No. 196/89which was rescinded on 1-3-1997, was issued in May 1999, for the rig imported in April 1993, the production of the essentiality certificate only reflected the purpose for which the rig is imported and since such purpose is not in dispute the exemption cannot be denied. 8. Learned Counselfor the appellants submits also that although Notification No. 516/86 was not in force when the matter was adjudicated and duty was to be paid in 2001, there were successor Notifications No. 16/2000-Cus dated 1-3-2000 and No. 17/2001-Cus dated 1-3-2001 which also provided for similar exemption. Learned Counselsubmits that denial of exemption on the ground that DGH was not the authority specified in notification No.516/86 also not tenable in law; the issue of payment of duty itself....
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....filing of the bill of entry, on 5.4.1999; the goods were not smuggled nor prohibited in the case of ONGC; as it was a case of provisional assessment, it was permissible to submit the certificate later before final assessment. The facts of the case of CC Vs Tullow India Operations 2005(189) ELT 410 were similar. In the case of appellants the application for essentiality certificate was not even made at the time of filing of bill of entry. The bill of entry was finally assessed. The benefit of the notification was also not claimed in the bill of entry and the application for essentiality certificate was made much after the final assessment of the bill of entry. Relying on CCE, Calcutta Vs AlNoori Tobacco Products reported in 2004 (170) ELT 135 (SC), he submits that as the facts of this case are entirely different, the same cannot be a precedent. Further, Apex Court in the case of CC (Import), Mumbai Vs Dilip Kumar & Co. reported in 2018 (361) ELT577 (SC) held that notification should be strictly interpreted and the conditions of the notifications should be strictly complied with. In the case of Jindal Drilling and Industries Ltd Vs CC, Bombay 2001 (138) ELT 1335 (Tri-Del) tribunal he....
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....Welfare Fund only. 13. Learned Authorised Representative also submits that the Appellant smuggled the Rig into India on 26.04.1988; they did not file any Bill of Entry; they did not have a license for its import; they moved the rig out of the Customs Area without permission and against the provisions of Sections 32, 33, 34 and 35 of the Customs Act, 1962; the appellants did not offer the rig to assessment under Section 17, 46 and 47 of the Customs Act, 1962 and they did not claim Notification 516/86 Cus and no application Essentiality Certificate was made until 06.06.2001. He submits that the Essentiality Certificate submitted has been issued by the Deputy General Manager (EC) Directorate General of Hydrocarbons, Ministry of Petroleum and Natural Gas, New Delhi, whereas the Notification 516/86-Cus required that the Certificate be issued by the Member - Secretary of the empowered Committee on the indigenisation of Oil Field Equipment and Services of the Ministry of Petroleum and Natural Gas, Government of India; on the date of issue of EC on 21.12.2001, there was no such Empowered Committee, as seen from the letter dated 26.07.2006 of the Under secretary, of the said ministry....
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....hall be in force up to and inclusive of the 30th day of November 1988; the said Notification is an example of Temporary Legislation because it was time bound and expired on its own terms without any Savings Clause and without any successor; temporary Legislation is not subject to the provisions of Section 6 of the General Clauses Act, 1897 as has been decided in Kumho Petrochemicals Co Ltd Vs UOI 2014 (304) ELT 3 (Del) and UOI vs Kunho Petrochemicals Co. Ltd. 2017 (351) ELT 65 (SC). He submits that the said Notification does not attract the provisions of Section 159A of the Customs Act, 1962, as the same was never repealed or rescinded or superseded by any subsequent notification/ legislation; the Notification expired on 30.11.1988 and did not save any right or privilege not claimed during its life time. He relies upon (i).District Mining Officer Vs Tata Iron and Steel Co AIR 2001 SC 3134 (ii).Rayala Corporation Vs Director of Enforcement AIR 1970 SC 494. (iii).Kolhapur Cane Sugar Works Ltd. UOI 2000 (119) ELT 257 (SC). (iv).Justice G.P.Singh's Principles of Statutory Interpretation 12" Edition Chapter 7 (pages 659 to 671) He submits that No Branch of the Executive s....
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....rtificate. 16. Learned Authorised Representative submits that the Rig has been classified under CTH 8905.20 and the Notification 17/2001-Cus (Sl. No. 247 read with Condition No. 49 and Sl. No 249 read with Condition No. 51)is also not applicable for the following reasons. (i). It applies only to Contracts between Government of India or State Government with ONGC Ltd or Oil India Ltd; the Appellant had no existing or past Contract with the Government of India. (ii). it applies only to Contracts issued or renewed after 1.4.1999; in this case contract expired on 15.2.1994; Contracts of ONGC are specifically covered by serial no. 250; the appellants had only licenses to operate on certain blocks; (iii). the Appellant, a foreign Company, is neither a Licensee a defined in the Notification nor a 'Sub Contractor'; appellants are contractors of ONGC Ltd and not of the Government of India or any State Government; This condition applicable only for contracts with Government of India not for contract with ONGC. (iv) None of the conditions of Clause (c) of Condition 49 are satisfied as there is no Affidavit or Undertaking or Certificate of non-release of any foreign Currency....
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....le for duty exemption under a Notification at the time of import, question of paying duty under Section 125 (2) does not arise. He submits that Tribunal held, in the case of Jagson International Ltd Vs CC - 2017(357)ELT1264, that Section 125 of Customs Act, neither specifies the authority to determine the duty nor it vests the obligation in a 'proper officer'; Section 125 of Customs Act, 1962 does not empower determination or assessment; it cannot be resorted except when duty has already been assessed and foregone at the time of import; in the instant case, the rig Trident-II was exempted from duty at the time of import, and therefore, no duty remained to be payable; Tribunal, vide final order (supra) in the first round of litigation, did not reject the Appellants' claim for exemption under Notification No.516/86- Cus dated 30-12-1986 on the ground that the Appellants cannot claim exemption at the time of redemption of the Rig in 2001; Tribunal rejected the claim on the ground that the Appellants did not have the Essentiality Certificate stipulated in Notification no.516/86 and gave liberty to the Appellants to pursue the claim; in effect it follows that only if the Appellants fail....
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....tion 6 of the General Clauses Act may not be construed dead for all purposes and the effect of expiry is essentially one of the constructions of the Act". He submits that even the "Principles of Statutory interpretation" by G.P. Singh relied upon by the authorized representative of the department, clearly states that expiry of a temporary statute does not make it dead for all purposes and enduring rights and obligations under the same would survive its expiry; in the present case upon the import of the Rig for purpose of oil exploration at a time, Notification no.516/86 which was in force, created an enduring right to exemption from duty on the said Rig which would survive the expiry of the Notification. 22. Learned Counsel for the appellants further submits that denial of exemption on the ground that DGH was not the authority specified in notification no.516/86 also not tenable in law; as the eligibility clause about the import of goods in connection with off-shore oil exploration/ exploitation which is to be strictly construed stands satisfied, the condition of the production of Essentiality Certificate must be liberally construed; in the facts of the present case, since t....
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.... manifest of the vessel which towed and brought the rig into India and even the customs permitted the rig to go for offshore oil exploration activities without requiring the filing of the Bill of Entry; that apart, the Ministry of Petroleum has issued the Essentiality Certificate certifying that the rig has been imported for the purpose of offshore oil exploration and it therefore follows that the requirements of the exemption Notification are fully satisfied; beneficial exemptions issued in national interest to promote oil exploration projects of national importance, for which the Rig has been imported, must be construed liberally; unlike in the case of M. Ambalal & Co- customs has subsequently permitted filing of Bill of Entry and the Bill of Entry has been filed and assessed. 24. Learned counsel further submits without prejudice that as an alternative, exemption under Notification No.17/2001-Cus dated 1-3-2001, is available; Sr.No.249 of the said notification grants exemption to Goods specified in List 19 required in connection with petroleum operations subject to condition No.51.; Sr.No.2 of List 19 of the condition No.51, covers all rigs if imported either by a contract....
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....of Notification no. 17/2001-Cus was not satisfied, learned Counsel submits that sanction of foreign exchange was not for the import of the rig but was for hire charges to be paid during the period of operation of the rig in India; condition No.51 bars remittance of foreign exchange for import of the rig; this condition is satisfied since the Essentiality Certificate clearly states no foreign exchange is remitted for the import of the rig. Replying to the contention by the authorized representative that the exemption should be denied to the Appellants since the same was not claimed in the Bill of Entry filed on 20-2-2011,learned counsel submits that this contention also is not tenable in terms of untenable in law in view of the fact that neither the adjudicating authority nor the first appellate authority denied the exemption on this ground and as such it cannot be denied by Tribunal now as held by Apex Court in Prince Khadi Woollen Handloom Products Cooperative Industrial Society (supra); moreover, the appellants while filing the bill of entry clearly stated, vide letter dated 20-2-2001, that the duty was being paid without prejudice to the Appellants' rights and contentions; in te....
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....s that the cases of ONGC and Tullow India Operations (supra) relied upon by the appellants would not be of any help to the appellants as the facts in those cases are different to the extent that the applications for essentiality certificates were made before filing of the Bills of Entry whereas in the case of the appellants no such application has been made before the Bill of Entry and that actually, the application was made after the Bill of Entry is finally assessed; the appellants did not have license to import the second-hand capital goods. Learned Authorized Representative submits that the impugned Rig is, in fact, smuggled as held by CESTAT 2001(135) ELT 625 (Tri.)and as such the benefit of Notification would not be applicable; Hon'ble High Court of Bombay has endorsed this opinion; further Apex Court in the case of Aban Loyd Chiles Off- Shore Ltd. 2017 (346) ELT 513 (SC) held, in similar facts of the case, that the Rig is confiscable under Section 111 of Customs Act, 1962. Learned AR submits that Hon'ble Supreme Court in the Arbitration Petition No.01/2006 decided that ONGC is liable to reimburse the amount of Customs duty to the appellant. Learned AR further submits that th....
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....epresentation before this Court or that the Directorate General of Hydrocarbons had shown any favour to it. Once it is held that the Ministry of Petroleum had renewed the licence and the Directorate General of Hydrocarbons had issued the essentiality certificate, the conditions precedent for obtaining exemption in terms of the exemption notification stood fully satisfied. (ii) In the case of Tullow India (supra) Hon'ble Court observed that: 10. However, it is also not in dispute that ONGC had applied for grant of exemption certificate before the Directorate General of Hydrocarbons in the month of April, 1999. The said essentiality certificate, however, could not be produced before the appropriate authority when importation took place as the same had not thence been granted as a result whereof a provisional clearance of the said tapes was made on 6th September, 1999. The appeal there against before the Tribunal came to be dismissed in December, 2003. Essentiality certificate, however, was granted in favour of ONGC on 23.06.2004. ....... 23. Both the importers are licensees. Indisputably, they were entitled to the benefit of the exemption notification subject, of course....
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....hrough the case. We find that the facts of the case therein are also different inasmuch as the classification of the Rig was in question along with the issue of essentiality certificate. In that case the impugned goods were not under seizure; though the issue of certificate was delayed, the application and claim of the notification were in time. 31. We find that the facts of the case before us are comparable to the case of Jindal Drilling and Indus Ltd. 2001 (138) ELT 1335.The Principal Bench observed in this case as follows: 20. But the factual background in this case is totally different. There was no Bill of Entry filed by the importer before removal of the goods as in all cases of this nature relied upon by the appellants. The goods, (qua dutiable cargo) were removed without permission of the proper officer on 17/18-4-1998 as already found by us. They had not applied for essentiality certificate before removal of the goods. They were fully aware about the terms of the notification. Such a condition was available in predecessor Notification 334/88-Cus. Which was rescinded w.e.f. 1-1-1989. They were desperately trying with the Central Govt. to revive the noti....
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....resentative for the Revenue that the Notifications are placed before the Parliament for approval and as such have the same force as that of legislation. If the legislature, which approved the Notification, prescribes that a particular authority is empowered to issue a certificate, the officers of the Ministry have no power to change the same and therefore, the certificate issued by a different authority even though authorized by the same Ministry unless due sanction of the legislature is obtained. We find that no such approval has been obtained. We find that Hon'ble Apex Court in the case of Orient Weaving Mills (P) Ltd. Vs UOI 1978 (2) ELT j311 (SC) and in other cases observed that "where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all". Therefore, we do not find any merit in the appellant's claim that the essentiality certificate being issued their eligibility to the exemption notification is established. We also find that Hon'ble Apex Court held in the case of CC, Import Mumbai Vs Dilip Kumar & Company, 2018 (361) ELT 577 (SC) had held that notification should be strictly interpreted and the conditions of the notification....
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....ved that 45. The contention that the rig in question could be imported under the provisions of OGL No. 8 of 88, is not acceptable. One of the conditions of this OGL is that the import is made in pursuance of the service contract awarded to a foreign contractor, the ONGC, Oil India, or Gas Authority of India Ltd. undertakes, that such equipment shall be re-exported after completion of the work. No such undertakings having been furnished by ONGC, this condition is not satisfied. Further, the rig, in any case, has not been re-exported after completion of the contract with ONGC. This condition is therefore incapable of being fulfilled. 35. Ongoing through the above order, it appears that the Bench's observation that the importers may pursue the certificate, if so advised, it was also categorically mentioned that one of the conditions is incapable of being met. It can be further seen that this Bench has not conferred any right to the appellant and have not also stated that the essentiality certificate needs to be accepted even though it is not issued by the authority designated in terms of the impugned Notification and even after the Bill of Entry is finally assessed. Therefore....