2013 (11) TMI 639 - AT - Customs

Duty demand u/s 28(2) - Import of self propelled Tug Smit Jaguar, year Built 2009 with NASSAU Registry - Exemption under Notification No.21/2002 dt. 01.03.2002 at Sl.No.216, List No.12 and condition Sr.No.31 - Held that - The Notification 21/2002 dt. 01.03.2002 at sl. No.216, provides Goods specified in List 12 required in connection with petroleum operations undertaken under specified contract are exempted from duty subject to fulfillment of condition 31 of the said Notification. As per the condition 31 of the said Notification, the applicant has obtained necessary certificate duly authorized by the relevant authority, certifying that the vessel has to be used for petroleum operations as per the agreement entered into between the applicant and the Govt. of India. There is no doubt that the vessel has been used for petroleum operations except for a period of 22 days for a salvage purpose other than petroleum operations. There is no post import condition imposed on the applicant in the said Notification. Waiver of pre deposit - applicant has made out a case for 100% waiver of pre-deposit of dues adjudged in the impugned order. Accordingly, we grant waiver of pre-deposit of the entire amount of duty, interest and penalty and stay recovery thereof during the pendency of the appeal. The bank guarantee of 5% of the duty executed by the applicant at the time of provisional release of the vessel shall be kept alive till the disposal of the appeal - Following decision of CLOUGH ENGINEERING LTD. Versus COMMISSIONER OF CUS. (IMPORT), MUMBAI 2005 (10) TMI 173 - CESTAT, MUMBAI and KEMWELL PVT. LTD. Versus COMMISSIONER OF CENTRAL EXCISE, BANGALORE-III 2006 (4) TMI 332 - CESTAT, BANGALORE - Stay granted.

Summary

Issues:
1. Stay of operation of impugned order confirming duty demand, interest, penalty, and redemption fine.
2. Interpretation of Notification No.21/2002 regarding exemption for goods used in petroleum operations.
3. Violation of notification conditions due to vessel being used for salvage operations.
4. Entitlement to benefit of notification despite temporary diversion of vessel's use.
5. Pre-deposit requirement and waiver consideration based on case law and factual analysis.

Analysis:
1. The judgment dealt with the applicant seeking a stay on the impugned order confirming duty demand, interest, penalty, and redemption fine under the Customs Act, 1962. The duty demand amounting to Rs.5,40,88,924/- was confirmed along with an equivalent penalty under Section 114A and a redemption fine of Rs.5,00,00,000/- in lieu of confiscation under Section 125(1) of the Customs Act.

2. The case revolved around the interpretation of Notification No.21/2002, which provided exemption for goods used in connection with petroleum operations under a specified contract. The applicant imported a vessel for petroleum operations but temporarily diverted its use for salvage operations, leading to a violation of the notification conditions. The dispute centered on whether the exemption could be denied due to the temporary alternative use of the vessel.

3. The Tribunal considered the arguments presented by both sides. The applicant contended that they fulfilled the notification conditions by obtaining the Essentiality Certificate and that the temporary diversion for salvage operations was justified due to unforeseen circumstances. On the other hand, the Revenue argued that the vessel was imported for petroleum operations, and any deviation from that specific purpose would result in the loss of exemption benefits.

4. Referring to the Notification's conditions and relevant case law, the Tribunal noted that there was no post-import condition imposed on the applicant. Drawing parallels with a previous case, the Tribunal concluded that the applicant was entitled to the benefit of the notification since the vessel was primarily intended for petroleum operations, despite the temporary deviation for salvage operations.

5. Consequently, the Tribunal granted a 100% waiver of the pre-deposit of dues adjudged in the impugned order. The recovery of duty, interest, and penalty was stayed during the appeal process, with the applicant required to maintain a bank guarantee of 5% of the duty until the appeal's disposal. Additionally, considering the significant revenue involved, the matter was scheduled for final hearing on a specified date.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by both parties, the Tribunal's interpretation of relevant laws and notifications, and the final decision granting a waiver of pre-deposit and stay on recovery pending appeal.