TaxTMI 
TaxTMI 
2026 (9) TMI 481
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2023 to 17.06.2024, classifying the same under the CTH 84198990 and claiming exemption from payment of Customs duty in terms of S.No.404 of Notification No. 52/2017-Cus dt.30.06.2017 (hereinafter referred to as the said notification). The concerned authorities had allowed the import of the impugned good under the cover of 8 different consignments covered by 10 Bills of Entry. Since the department had not agreed with the aforesaid claim of exemption, the respondents were allowed to clear the said consignments on payment of duty at merit rate under protest, keeping the assessment provisional. 3. The Adjudicating Authority, for the purpose of finalizing provisional assessment of the said BoEs, gave personal hearing and accordingly, the respondents availed the said opportunity and also gave written submissions. After having regard to their submissions, wherein they, inter alia, emphasized that the impugned good was purchased under one purchase order dt.28.06.2021 even though it was imported under various consignments in an un-assembled condition and by virtue of Rule 2(a) of General Rules of Interpretation of Tariff, same are classifiable under the same tariff heading as that of as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....adjudicating authority has nowhere disputed the respondent's claim that the MEG Reclamation Plant answers the description viz., 'Equipment/Units for specialized services meant for Offshore and Onshore Petroleum Operations', given at S.No.4 in column 3 of the List 33. c) That there is no dispute that this is a plant/unit meant for specialized services meant for offshore and onshore petroleum operations and is necessarily required for production of natural gas. d) That they have met the criteria of description of goods in column 3 of the table of List 33 and that they have met the criteria of chapter specified in column 2 of the table. e) That, as held in the following judgments, each entry in a notification is a distinct, separate and self-contained exemption and the scope of an entry in the notification has to be determined independently based on the words/ terms used therein and not by comparison with or reference to the terms of some other entry in the notification. a) Tata Tea Ltd Vs CCE [2004 (164) ELT 315 (Tri-Del)] b) Share Medical Care Vs UOI [2007 (209) ELT 321 (SC)] c) Coca Cola India P Ltd Vs CCE [2009 (15) STR 657 (Bo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....zed services meant for Offshore and Onshore Petroleum Operations', as reflected in column 3 of List 33. 7. Insofar as the effect of amendment to the List 33 by inserting S.No.3, vide Notification No. 30/2024-Cus dt.23.07.2024, being a specific entry visà-vis List 33 Entry No.4, which is a general entry, he held that the said specific entry has to operate prospectively, whereby, the impugned goods would be covered under the specific serial number i.e., S.No.3, however, prior to amendment, the goods shall legitimately be covered under general entry. He has relied on ratio decidendi of the Tribunal Mumbai in the case of Jetlite India Ltd Vs CCE, New Delhi [2011 (21) STR 119 (Tri-Del)] and decision of Hon'ble Supreme Court in the case of Jain Engineering Co Vs CC (supra). He has also considered the implication of the judgment of Hon'ble Supreme Court in the case of CC (Import), Mumbai Vs Dilip Kumar & Company [2018 (361) ELT 577 (SC)]. He has observed that there is no ambiguity in the said notification and as evident from plain reading itself, they are eligible for exemption and hence the ratio is not applicable. 8. The department has essentially held that the impugned ord....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... g) That DGH is not proper authority to decide the eligibility under the said notification. h) That the observation of the Commissioner (Appeals) as regards subject goods were being rightly classifiable under general entry of S.No.404 until specific entry came into force is not correct as even after amendment, S.No.4 of the list remained same as it was prior to the amendment and the subject goods falling under chapter heading 8419 has now been mentioned specifically at S.No.3, which indicates that the same was not covered under the scope of S.No.4 and the intention of the Government was to extend exemption to subject goods only w.e.f. 24.07.2024. i) That the Commissioner (Appeals) has not applied the ratio of the decision of Hon'ble Supreme Court in the case of CC (Import), Mumbai Vs Dilip Kumar & Company (supra). 9. Learned Special Counsel for the department has taken us through the grounds of appeal filed by the department, wherein, inter alia, the department has pointed out that the findings to the effect that column 2 of list 33 is not relevant for determining the eligibility of the goods is not proper and legal for various reasons including the fact ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lized services for offshore and onshore petroleum operations' was 8430 prior to 2024, whereas, the heading applicable all along to the impugned good was 8419. Furthermore, the 2024 amendment has placed impugned plant with 'equipment required for process and production platform' and therefore, if it was already covered under S.No.4, there is no need to specify it and club it under 'equipment required for process and production platform'. 11. Insofar as reliance placed by the Original Authority on the decisions of Hon'ble Supreme Court in the case of CC (Import), Mumbai Vs Dilip Kumar & Company (supra), the same is applicable to the facts of the case as there is an ambiguity in the notification and hence, the benefit should go to the Revenue. 12. Learned Advocate for the respondent, on the other hand, has, inter alia, highlighted the fact that department has not disputed that the impugned good is 'equipment/units for specialized services for offshore and onshore petroleum operations', which has also been certified by the DGH, vide letter dt.16.12.2022. He has submitted that the Original Authority has primarily proceeded on the basis that by an amendment dt.24.07.2024, the impug....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ioning of heading 8430 and non-mentioning of heading 8419 in column 2 of list 33 at S.No.4 is entirely irrelevant to the issue of eligibility. He has also submitted that at best the headings mentioned in column 2 of list 33 are indicative or illustrative and not exhaustive and therefore not relevant. In this regard, he has given various examples of various entries in column 3 read with headings shown in column 2, as under. a) The very first serial number in list 33 mentions in column 2 the heading 7304, but amongst the description of goods in column 3 there is mention of couplings which specifically fall under heading 7307. Column 2 in S.No.1 does not mention the heading 7307 under which couplings fall and yet couplings are specifically mentioned in the description of goods in column 3. This clearly shows that the headings mentioned in column 2 of list 33 are not exhaustive and/or not fully accurate or aligned with description given in column 3 of list 33. b) S.No.3 in list 33 mentions 'gas turbine' in column 3 under description of goods. Gas turbines fall under heading 8411. However, there is no mention of heading 8411 in column 2 of list 33 at S.No.3. This clear....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it is a settled issue that each entry in a notification is distinct, separate and self-contained exemption and the scope of an entry in the notification has to be determined independently based on the words/terms used therein and not by comparison with or reference to the terms of some other entry in the notification. He has relied on the following decisions. a) Tata Tea Ltd Vs CCE [2004 (164) ELT 315 (Tri-Del)] b) Share Medical Care Vs UOI [2007 (209) ELT 321 (SC)] c) Coca Cola India P Ltd Vs CCE [2009 (15) STR 657 (Bom)] 16. Therefore, the impugned goods though specifically indicated at S.No.3 w.e.f. 24.07.2024, it does not mean that the said good was not covered for the earlier period by the general description given in another entry i.e., S.No.4, which existed even prior to 24.07.2024. Therefore, they were well within their rights to claim exemption under S.No.4 for the period prior to 24.07.2024 and for the period beyond 24.07.2024, the same would now be covered under S.No.3. 17. Heard both sides and perused the records. 18. We find that the core issue to be decided in this appeal is that whether the impugned goods are eligible for exemption....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f integrated tax leviable thereon under subsection (7) of section 3 of said Customs Tariff Act, read with section 5 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) as is in excess of the amount calculated at the rate specified in the corresponding entry in column (5) of the said Table, subject to any of the conditions, specified in the Annexure to this notification, the condition number of which is mentioned in the corresponding entry in column (6) of the said Table. TABLE S.No. Chapter or Heading or sub-Heading or tariff item Description of goods Standard rate Integrated Goods and Service Tax Condition No. 404 27, 29, 31, 38, 39, 73, 82, 84, 85, 87, 89 or 90 Goods specified in column (3) of List 33 when imported by a specified person, in relation with petroleum operations or coal bed methane operations undertaken under: a) petroleum exploration licenses or mining leases b) the New Exploration Licensing Policy c) the Marginal Field Policy d) the Coal Bed Methane Policy e) the Hydrocarbon Exploration Licensing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....emption to the description of the goods subject to certain conditions, as indicated above. There is no dispute about their not meeting any conditions stipulated under S.No.404 except for the dispute that column 2 of list 33 has to be read along with the description. 24. The Commissioner (Appeals) has taken a view that as is evident from the main body of the notification, the Government has exempted goods of the description specified in column 3 of the table or in column 3 of said table read with relevant list appended thereto, as the case may be, and falling within the chapter, heading, sub-heading or tariff item of the first schedule to the said Customs Tariff Act, as are specified in the corresponding entry in column 2 of the said table. 25. We note that the Commissioner (Appeals) has based his conclusions regarding the eligibility of impugned goods under said notification primarily on the ground that a plain reading of the notification would invariable lead to the conclusion that the exemption is available to impugned goods i.e. 'equipment/units for specialized services meant for offshore and onshore petroleum operations'. Additionally, he has also examined the basis for d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....018 (362) ELT 866 (Tri-Bang)]. 28. A plain reading of this notification would indicate that the goods are either exempted, with or without condition, in the main table itself, where there is omnibus indication of chapter or heading or sub-heading or tariff item in column 2 and different entries have different classifications, either at 2 digit level, 4 digit level or 8 digit level. Therefore, insofar as the main table is concerned, it is very obvious that it provides not only the description in column 3, which is relevant, but the same has to be also specified in the corresponding entry in column 2, which may be in terms of chapter, heading, sub-heading or tariff item. It is important to note that the condition for meeting the entry in column 2 is either chapter, heading, sub-heading or tariff item. Therefore, when it comes to S.No.404, the description in column 3 is not sufficient as it has to also meet the chapter or heading or subheading or tariff item as indicated in column 2 of the said main table in the notification. Therefore, unless the goods of the description also are otherwise covered within the chapters indicated at column 2 of entry at S.No.404, they will not be eli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ially for excavation, drilling, digging, etc., and are very clearly identifiable equipment. There is only one specific item viz., petroleum and gas well drilling machinery. We note that neither the expression 'petroleum operations' nor 'specialized services' have been defined in notification. Hence, inference has to be drawn from the context in which it has been used. We find both these terms have been mentioned in the list 33 of S.No.404 of Notification No. 50/2017 at S.No.4 & 5 for the period prior to amendment. While at S.No.4, it covers marine vessels of several types supporting 'petroleum operations', S.No.5 indicates illustrative list of specialized services. S.No.4 & 5 are cited below. "4) All types of marine vessels to support petroleum operations including work boats, barges, crew boats, tugs, anchor handling vessels, lay barges and supply boats, marine ship equipment including water maker, DP system and Diving system. 5) All types of equipment/units for specialized services like diving, cementing, logging, casing repair, production testing, simulation and mud services, oil field related lab equipment, reservoir engineering, geological equipment, directio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hapatnam Sir, Subject: Issues arising in implementation of recent amendment under SI. No. 404 and List 33 of Customs notification No. 50/2017 In this Budget, the entry at S. No. 404 of notification No. 50/2017 dated 30th June, 2017 was amended, rationalizing the list of items used in the petroleum operations and eligible for exemption under this entry [amended by notification No. 02/2022 dated 2nd February, 2022]. Ministry of Petroleum and Natural Gas (MoPNG) has now written to the Department of Revenue, stating that exemption is being denied on certain items which are specifically covered by the description in the List. The filed formation seems to have taken objection that certain goods are classifiable in CTHs other than those mentioned in the notification. 2. In the said list exemption for high pressure valves, falling under CTH 8413 or 8414 is available. Ministry of Petroleum and Natural Gas (MoPNG), has informed that Christmas Tree Valves under this category while Customs field formations have taken a view that it is classifiable under heading 8481, and accordingly, are not allowing the exemption on this. The consignment is lying at Kakinad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....odal Ministry i.e., Ministry of Petroleum and Natural Gas, examined the issue in respect of certain denial of exemption to a few products on the grounds that there is a mismatch between chapter heading and description. After examination of the same, they clarified that the intention was to give exemption to those items under S.No.404, as is evident from the description of the goods in the notification and considering that these items are critical for the petroleum operations, the field formation may allow clearance of these two items under said entry. Therefore, in other words, this clearly supports the view of the respondent and the Commissioner (Appeals) that intention was to give the exemption to the goods as described in column 3 without having much regard to the chapter headings indicated in column 2 in case there is any dispute in the coverage of the said items under the aforesaid chapter heading. This would also support the view that the notification was essentially intended for extending exemption to all the specified items falling under respective headings when imported by a specified person in relation with petroleum operations. It is on record that the Regulator for the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rts. Therefore, he has correctly relied on the said judgment in support that if the description of the goods covers the impugned good, even if it does not fall within the heading 8430, it would still be eligible for exemption. Reliance placed by Commissioner (Appeals) on the ratio to the facts of the case is correct. 35. Therefore, we find that the inference drawn by the Commissioner (Appeals) to the effect that amendment in 2024 would not have any impact on the exemption as was available during the relevant time in terms of general description of the said impugned goods in the notification itself and that even if there was any incongruity or non-mentioning of the relevant heading 8419 at S.No.4, it would still be entitled for exemption, is based on sound reasons and interpretation of wordings used in the said notification. 36. We find that the both sides have also relied on various case laws, as cited supra. We now proceed to examine the cited case laws. The department has relied on the case of LM Wind Power Blades (India) Pvt Ltd Vs CC, Tuticorin (supra) in support that the description has to be read along with tariff item number. We find that in this case, list 9A for the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... CC (Import), Mumbai Vs Dilip Kumar & Company (supra), we find that the said judgment of Hon'ble Supreme Court, inter alia, provided that every taxing statute including charging, computation and exemption clause (at the threshold stage) should be interpreted strictly and further, in case of ambiguity in the charging provision, the benefit must necessarily go in favour of the subject/ assesse but in case of ambiguity in an exemption notification, the benefit of notification must be strictly interpreted in favour of Revenue. We find that in order to apply the ratio of the said judgment, what is required first and foremost is that there has to be ambiguity while interpreting the exemption notification. In this case, Commissioner (Appeals) has held that a plain reading of the notification and entries thereto itself does not leave any room for ambiguity. We agree with this observation as we find that plain reading itself would indicate that it is the description of the goods as indicated in column 3, which is relevant as long as said goods are otherwise also covered in column 2 of the main notification. There is also no other ambiguity regarding coverage in terms of specified person or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... fulfilled all the prescribed conditions will not cease to operate just because the capital investment exceeded the limit of Rs. 3 lakhs on account of the respondent becoming the owner of land and building to which the unit was shifted. If the construction sought to be placed by the appellant is accepted, the very purpose and object of the grant of exemption will be defeated. After all, the respondent had only shifted the unit to its own premises which made it much more convenient and easier for the respondent to carry on the production of the goods undisturbed by the vagaries of the lessor and without any necessity to spend a part of its income on rent. It is not the case of the appellant that there were any mala fides on the part of the respondent in obtaining exemption in the first instance as a unit with a capital investment below Rs. 3 lakhs and increasing the capital investment subsequently to an amount exceeding Rs. 3 lakhs with a view to defeat the provisions of any of the relevant statutes. The bona fides of the respondent have never been questioned by the appellant." 20. Likewise, even under the Customs Act, this Court in Commr. of Customs (Preventive) v. M. Amba....
X X X X Extracts X X X X
X X X X Extracts X X X X
....applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. 66.2 When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the Revenue. 66.3 The ratio in Sun Export case [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564] is not correct and all the decisions which took similar view as in Sun Export case stand overruled." 23. It may be noticed that the 5-Judge Bench judgment did not refer to the line of authority which made a distinction between exemption provisions generally and exemption provisions which have a beneficial purpose. We cannot agree with Shri Gupta's contention that sub-silentio the line of judgments qua beneficial exemptions has been done away with by this 5-Judge Bench. It is well settled that a decision is only an authority for what it decides and not what may logically follow from it [see Quinn v. Leathem - [1901] AC 495 as followed in State of Orissa v. Sudhansu Sekhar Misra - (1968) 2 SCR 154 at 162, 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....intended for providing specific exemption to particular sector i.e., petroleum and natural gas sector, where India had gone for exploration under NELP in order to increase the production of oil and natural gas in India. In order to facilitate that, the Government has extended various incentives and exemptions for various items used for such exploration, production, processing, etc., of oil and natural gas. Therefore, the intended purpose was to promote production and exploration of natural gas, which was beneficial to the economy. In view of the same, this entry of the notification has to be construed as beneficial notification and has therefore, to be taken to its logical end. Therefore, we find that the adjudicating authority has rightly distinguished the applicability of the judgment of Hon'ble Supreme Court in the case of CC (Import), Mumbai Vs Dilip Kumar & Company (supra) in the facts of the case. 43. Insofar as various other case laws cited by the respondent, we find that in the case of Share Medical Care Vs UOI (supra), the Hon'ble Supreme Court has, inter alia, examined the scope of the notification and held that it is a well settled law that in case an applicant is ent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve not heard anybody say that 'consumable' could be so construed as to exclude fuels like furnace oil used in boilers. In the cases of Mangalore Chemicals and Fertilizers (supra) and Novopan India (supra), it was held by the Court that, once an assessee was found to fall within the ambit of an Exemption Notification, full effect should be given to the exemption by a liberal interpretation of the terms of the notification. This ruling appears to have a say in the instant case. The appellants had, admittedly, satisfied all the substantive conditions of Notification No. 1/95-C.E. to come within its purview. The only dispute was whether the "furnace oil" which was procured without payment of duty fell within the coverage of "consumables" under Entry No. 7. When construed in terms of the Apex Court's ruling, the entry would squarely cover the appellants,' furnace oil. We need not consider the learned Counsel's plea for giving retrospective effect to Notification No. 40/2000-C.E." 45. We find that this is relevant to the facts of the case and as discussed supra, the intent of the said entry, including before and after amendment, has always been to extend the exemption to the entir....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rpose and the purpose for which exemption was granted must be considered in entirety. The relevant paras are cited below. "20. In our opinion, the entire order has to be read as a whole. Exemption was granted to equipments made to be used for a particular purpose. A contextual meaning to the entries, keeping in view the nature of exemption sought to be granted by reason of the said notification, must be assigned. The crane was to be shifted from place to place covering a huge area. Its services were required at a large number of places. It has been found that the description of the crane, technically given as Heavy Duty Crane was, in fact, a mobile crane. Only with a view to provide mobility thereto, a self-propelled modular transport system had been provided. It had to be consigned in different parts for convenience of transport so as to enable the importer to reassemble the same. It was on that basis, the equipment was found classifiable under Heading 84.26 and not 8724.90. In the alternative, the goods were found to be falling under serial No. 18 of the notification. This finding of fact is not in question. What is in question is that only ....