2005 (8) TMI 132 - HC - Central Excise

Issues Involved:
1. Validity of the notice dated 30th December 1992 issued by the Assistant Collector of Central Excise.
2. Applicability of exemption from excise duty under Notification No. 123/81 dated June 2, 1981.
3. Determination of whether the goods were exported or sold within India.
4. Interpretation of territorial jurisdiction concerning offshore platforms under various statutes and the Constitution of India.

Issue-wise Detailed Analysis:

1. Validity of the Notice Dated 30th December 1992:
The petitioner challenged the notice issued by the Assistant Collector of Central Excise, Midnapore Division, which initiated proceedings to levy excise duty on goods manufactured by the petitioner. The court examined the legality of this notice in light of the exemption claimed by the petitioner under Notification No. 123/81 dated June 2, 1981.

2. Applicability of Exemption from Excise Duty:
The petitioner contended that the goods manufactured in their 100% export-oriented unit (EOU) were exempt from excise duty under Notification No. 123/81. The court analyzed whether the goods, which were sent to offshore platforms 'ED' and 'EE' located beyond the territorial waters of India, qualified for this exemption. The court noted that the exemption was applicable unless the goods were sold in India.

3. Determination of Whether the Goods Were Exported or Sold Within India:
The petitioner argued that the goods were exported as they were sent to platforms situated more than 200 nautical miles beyond India's territorial waters. The court referred to Section 2(18) of the Customs Act, which defines 'Export' as taking goods out of India, and Section 2(27), which defines 'India' to include territorial waters. The court also considered the provisions of the Territorial Waters, Continental Shelf, Exclusive Economic Zones, and other Maritime Zones Act, 1976 (Zone Act), which extends India's territorial waters up to 12 nautical miles and the exclusive economic zone up to 200 nautical miles. The court concluded that the platforms 'ED' and 'EE' were not within the designated areas of the continental shelf as per the notifications in force at the relevant time.

4. Interpretation of Territorial Jurisdiction:
The court examined whether the offshore platforms 'ED' and 'EE' fell within Indian territory under the Zone Act and the Constitution of India. The court referred to Article 1(3) and Article 297 of the Constitution, which define the territory of India, and the Zone Act, which demarcates territorial waters, contiguous zone, continental shelf, and exclusive economic zone. The court noted that the sovereignty of India extends to territorial waters but not to the exclusive economic zone unless specifically notified. The court relied on the Bombay High Court's decision in Pride Foramer v. Union of India and concluded that the platforms were not within Indian territory for the purposes of excise duty at the relevant time.

Conclusion:
The court held that the goods were not sold within Indian territory and thus were eligible for the exemption under Notification No. 123/81. The court set aside the show cause notice and the order passed by the Assistant Commissioner of Central Excise. The respondents were directed to grant the exemption and refund any deposits made by the petitioner.

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