2017 (7) TMI 270 - AT - Customs

Levy of Customs Duty - sea food harvesting - It was the case of the Revenue in the SCN that the mid-sea bunkering facility for fishing activity is being mis-utilised and on completion of the enquiry, SCN was issued alleging misutilisation of duty-free bunkers procured in the mid sea for the purpose other than the fishing i.e. using the boats as chase boats during the period - Held that - instead of going into various arguments put forth by both sides, the matter can be disposed of only on the jurisdiction issue. The appellant had submitted that the activities undertaken by the vessels took place beyond the territorial waters which are undoubtedly part of India falling under Territorial Waters, Continental Shelf, EEZ or other Maritime Zones Act and to make law which is the prerogative of the Govt of India and can exercise limited sovereignty over EEZ and Continental Shelf for specific purposes. We find that this argument of the appellant seems to be correct - Further it is noticed that by N/N. 108/2008-Cus (NT) dated 23.09.2008 while amending original N/N. 15/2002-Cus(NT) dated 07.03.2002, the territorial status of the Commissioner of Customs, Visakhapatnam has been specified which does not contain the EEZ near Visahkapatnam. Consequently, the activities undertaken by the appellants vessels beyond the territorial waters are not falling within the territorial jurisdiction of Commissioner of Customs, Visakhapatnam. Learned DR was not able to produce anything contrary to the said N/N. 108/2008-Cus. Appeals have been allowed only on jurisdiction.

Summary

Issues:
Jurisdictional issue regarding levy of customs duty on fishing trawlers used as chase boats in Exclusive Economic Zone (EEZ).

Analysis:
The appeals involved a jurisdictional issue concerning the levy of customs duty on fishing trawlers used as chase boats in the Exclusive Economic Zone (EEZ). The appellants owned fishing trawlers issued fishing passes by the Customs department for sea food harvesting. The Customs department also granted permission for mid-sea bunkering. The Revenue alleged misutilization of duty-free bunkers procured in the mid-sea for purposes other than fishing, specifically for using the boats as chase boats during oil exploration activities. The adjudicating authority confirmed the demands raised, imposed penalties, and the First Appellate Authority upheld the order with reduced penalties. The appellant contended that no customs duty was warranted as the trawlers were used as chase boats in the territorial waters of India in the EEZ, citing legal precedents. The Revenue argued that jurisdiction was not an issue based on a Board Circular. The Tribunal found that the activities took place beyond territorial waters falling under the EEZ, where the Customs jurisdiction was limited. The Tribunal referred to a notification specifying the territorial status of the Commissioner of Customs, Visakhapatnam, which did not include the EEZ near Visakhapatnam. Citing a Bombay High Court judgment, the Tribunal held that the Commissioner of Customs does not have jurisdiction beyond 12 nautical miles from the shore. As the fishing trawlers were operating in the EEZ beyond 12 nautical miles, the Tribunal set aside the impugned orders based on the jurisdictional issue alone, without delving into other arguments presented.

This judgment clarifies the application of customs duty jurisdiction in cases involving activities beyond territorial waters, emphasizing the limited sovereignty of the government over the EEZ and Continental Shelf. The Tribunal's analysis focused on the specific territorial jurisdiction of the Commissioner of Customs, Visakhapatnam, and the legal precedent set by the Bombay High Court regarding jurisdiction over activities beyond 12 nautical miles from the shore. By setting aside the orders solely on the jurisdictional issue, the Tribunal highlighted the importance of establishing the appropriate customs jurisdiction for activities conducted in areas like the EEZ.