2017 (10) TMI 35 - AT - Customs

Violation of import condition - respondent had imported and supplied diesel oil/bunkers to various shipping vessels which were not used for fishing purposes but were detailed for taking survey for ONGC and used in the Exclusive Economic Zone (EEZ) of India - Held that - the issue of using duty free bunkers by fishing vessels when they are used as chase boats for either seismic operations or for oil exploration activities in the EEZ, the Tribunal in the case of SAGARIKA SEA CRAFTS LTD. Versus COMMR. OF CUS., VISAKHAPATNAM 2009 (11) TMI 745 - CESTAT BANGALORE has held that these duty free bunkers cannot be charged to customs duty even though they were procured for fishing purposes - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether duty-free bunkers imported for supply to fishing vessels, allegedly used for purposes other than fishing operations, are liable for customs duty?

Analysis:
The appeals were filed by the Revenue against an order-in-appeal, challenging the import of duty-free bunkers for fishing vessels allegedly used for non-fishing purposes. The respondent imported diesel oil/bunkers for fishing vessels but was found to supply them to vessels engaged in ONGC activities in the Exclusive Economic Zone (EEZ) of India. The adjudicating authority confirmed demands, interest, and penalties, which were later set aside by the 1st Appellate Authority.

The Revenue argued that the fishing vessels were used as chase boats for ONGC operations, supported by logbook entries and statements from vessel personnel and company officials. They contended that the vessels were within the territorial waters of India, making the bunkers subject to customs duty under the Customs Act 1962. The Revenue also questioned the credibility of certain statements and documents presented by the respondent.

The respondent, however, relied on previous tribunal decisions where similar issues were decided in their favor. They argued that duty-free bunkers used for oil exploration activities in the EEZ, even if procured for fishing purposes, should not attract customs duty. The Tribunal found that the issue had been settled in previous judgments, concluding that duty-free bunkers used for non-fishing purposes in the EEZ were not liable for customs duty.

In light of the precedents and the specific circumstances of the case, the Tribunal upheld the decision of the 1st Appellate Authority, ruling in favor of the respondent. The appeals by the Revenue were deemed meritless and rejected, affirming the legality of the impugned order.

In conclusion, the judgment clarified the applicability of customs duty on duty-free bunkers used for non-fishing purposes in the EEZ, citing previous tribunal decisions that established the non-liability of such bunkers. The ruling emphasized the importance of considering the specific activities and locations where the bunkers were utilized, ultimately determining the customs duty obligations in such cases.