2005 (10) TMI 173 - AT - Customs

Confiscation Of imported Seamless C.S. pipes - seized goods were in excess of the quantity of pipes - Penalty - Customs exemption - whether the goods imported in April and September, 2002 are eligible to the benefit of duty free import under Notification No. 21/2002 - HELD THAT - The stand of the Department is that since the seized goods were in excess of the quantity of pipes actually used in the Laxmi Field Project Phase I by the importers who had entered into a contract dated 29-6-2001 with M/s. Cairns Energy Pvt. Ltd. for execution of the above project by carrying out engineering, designing, procurement construction, fabrication and installation of two platforms, pipelines and onshore gas processing plant etc., they were not required for the project and hence the condition in the notification had been violated by them. On the other hand, the importers contend that the goods were required for the project as certified by the Directorate General of Hydro Carbon who is the authority prescribed under the Notification for issue of certificate of requirement, and that there is no stipulation in condition 31 that imported goods have to be actually used in the said project; and therefore sale of seamless pipes is not contrary to the condition of the Notifications. In the case of Commissioner of Central Excise Chennai v. Q Max Test Equipment Pvt. Ltd. 2003 (3) TMI 513 - CEGAT, CHENNAI and in the light of the admitted position that the project was completed by the appellants which in turn confirms that the 400 MM dia Seamless C.S. Pipes were intended for use in the project we hold that the appellants are eligible to the benefit of Notification No. 21/2002 and hence confiscation duty demand and penalty are not sustainable, and accordingly set aside the same. The impugned order is set aside and the appeal allowed.

Summary

Issues:
1. Confiscation of imported goods under Section 111(o) and imposition of fines.
2. Denial of duty-free import benefit under Notification No. 21/2002.
3. Interpretation of the expression "required for petroleum operations" in the notification.

Analysis:
1. The judgment dealt with the confiscation of imported Seamless C.S. Pipes under Section 111(o) by the Commissioner of Customs due to non-utilization for the intended project, resulting in a demand for duty payment and imposition of fines. The Tribunal considered the misrepresentation regarding the quantity required for the project and the penalty imposed under Section 112 of the Customs Act.

2. The crux of the issue revolved around the eligibility of imported goods for duty-free import under Notification No. 21/2002. The notification exempted goods required for petroleum operations subject to specified conditions, including the production of a certificate from the Directorate General of Hydro Carbon. The dispute arose from the interpretation of the term "required for petroleum operations" concerning the actual use of the imported goods in the project.

3. The Tribunal analyzed relevant case laws to interpret the term "required for use" in notifications granting duty exemptions. Referring to judgments such as State of Haryana v. Dalmia Dadri Cement Ltd. and Commissioner of Central Excise Chennai v. Q Max Test Equipment Pvt. Ltd., the Tribunal emphasized that the absence of an end-use condition in the notification supported the importer's claim that the goods were intended for use in the project, even if not directly utilized.

4. Ultimately, the Tribunal concluded that the imported Seamless C.S. Pipes were intended for use in the project, as confirmed by the completion of the project by the importers. Therefore, the appellants were deemed eligible for the benefit of Notification No. 21/2002. Consequently, the confiscation, duty demand, and penalty imposed were deemed unsustainable, leading to the setting aside of the impugned order and allowing the appeal.

In summary, the judgment addressed issues related to confiscation of imported goods, denial of duty-free import benefits, and the interpretation of essential terms in the notification, ultimately ruling in favor of the appellants based on the intended use of the goods for the specified project.