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2015 (7) TMI 816 - AT - CustomsEligibility of exemption for Marine Gas Oil - exemption under Sl. No. 217 of Notification No. 21/2002-Cus., dated 1-3-2002 - Held that - There was a specific query from the Custom House asking the Chemical Examiner to state specifically whether the product is MGO or not. Instead of specifically stating whether the product is MGO or not, the Chemical Examiner has chosen to show us that the product is LDO. In the absence of a specific report from the Chemical Examiner that the product is not MGO which was what required by the Custom House, it cannot be said that the Chemical Examiner s report supports the case of the Custom House. There is no evidence to show that the product is not MGO. - In fact even though the tests were conducted much earlier the results of the samples were communicated to the appellants only in 2012, the learned counsel drew our attention to a letter written by the appellants to the Customs saying that the sample may be referred to CRCL for re-examination. Further no action was taken on this letter probably because by the time the letter was written a number of years have already passed. Since it is not the case of the Revenue that the product imported by the appellant does not fulfill the parameters for MGO as per the Indian Standards, we are not in a position to uphold the impugned order taking a stand that what is imported is LDO and not MGO and therefore the benefit of exemption is not available. - appellant is eligible for the benefit of the notification as claimed by them and accordingly the impugned order is set aside - Decided in favor of assessee.
Issues Involved:
1. Eligibility of exemption for Marine Gas Oil (MGO) under Sl. No. 217 of Notification No. 21/2002-Cus., dated 1-3-2002. 2. Determination of whether the imported product is Marine Gas Oil (MGO) or Light Diesel Oil (LDO). Issue-wise Detailed Analysis: 1. Eligibility of Exemption for Marine Gas Oil (MGO): The appellants sought exemption for Marine Gas Oil under Sl. No. 217 of Notification No. 21/2002-Cus., dated 1-3-2002. The Notification specifies that goods required in connection with petroleum operations under specified contracts under the New Exploration Licensing Policy are eligible for exemption. The appellants, being sub-contractors, needed to satisfy Condition No. 32(c)(i) which required a certificate from the Directorate General of Hydrocarbons (DGHS) confirming the necessity of the imported goods for petroleum operations. The appellants produced the essentiality certificate from DGHS, which mentioned the quantity and name of the product as Marine Gas Oil. 2. Determination of Whether the Imported Product is Marine Gas Oil (MGO) or Light Diesel Oil (LDO): The Customs officers drew samples of the Marine Gas Oil and sent them for chemical examination to ascertain whether the product was indeed MGO. The Chemical Examiner's report described the sample as "Dark Mineral Hydrocarbon Oil" with characteristics of LDO. The specific characteristics noted were: - Flash point: 85^0C - Kinematic Viscosity at 40^0C: 4.6 cst - Density at 15^0C: 0.8440 gm/ml - Sulphur content: 0.880% The Chemical Examiner concluded that the sample had the characteristics of LDO. The respondent argued that since the product was identified as LDO, the exemption for MGO could not be granted. However, the appellants contended that the characteristics of the sample met the specifications for MGO as per ISO 8217 Grade DMA, 2010. They pointed out that the density, sulfur content, flash point, and kinematic viscosity of the sample were within the limits prescribed for MGO. The Tribunal found merit in the appellants' arguments, noting that the Chemical Examiner did not explicitly state that the product was not MGO. Instead, the report only indicated that the product had characteristics of LDO. The Tribunal observed that the product imported by the appellants could meet the standards for both MGO and LDO. Additionally, the appellants highlighted that the engines of the Drillships had an rpm greater than 750, indicating that LDO could not have been used, further supporting their claim that the imported product was MGO. Conclusion: The Tribunal concluded that the appellants were eligible for the exemption under the Notification as the imported product could be considered MGO. The Chemical Examiner's report did not definitively prove that the product was not MGO, and the product met the necessary parameters for MGO. Consequently, the impugned order was set aside, and the appeals were allowed with consequential relief to the appellants.
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