2016 (6) TMI 709 - AT - Customs

Classification of import of Marine Gas Oil - department took the view that the imported Marine Gas Oil can only be treated as Light Diesel Oil, and cannot be granted exemption under CN 21/2002, Sl No 217, against the Essentiality Certificate issued by the Directorate General of Hydrocarbons. - Held that - what was imported was Marine Gas Oil and not Light Diesel Oil and hence the benefit of exemption under CN 21/2002, Sl.No.217, against the Essentiality Certificate issued by the Directorate General of Hydrocarbons, will be available to said Marine Gas Oil. - Decided in favour of appellant.

Summary

Issues:
Classification of imported Marine Gas Oil, Duty exemption eligibility for consumables during voyage.

Analysis:
1. The appellants filed a Bill of Entry for clearance of a seismic support vessel and consumables, including Marine Gas Oil (MGO), claiming duty exemption under Customs Notification No. 21/2002. The Customs Laboratory reported that the MGO had characteristics of Light Diesel Oil (LDO), leading to the department's view that the exemption cannot be granted. The adjudicating authority confirmed this view and ordered recovery of differential duties.

2. The appellant argued that the MGO should be classified under a different tariff entry and not as LDO, citing the necessity of the voyage for petroleum operations. They also referenced a previous Tribunal case, Transocean Discoverer, where similar issues were decided in favor of the appellant. The Tribunal in the cited case emphasized the lack of evidence against the product being MGO and upheld the benefit of exemption.

3. The Tribunal in the present case agreed with the appellant, following the decision in Transocean Discoverer, stating that the imported product was indeed MGO and not LDO. Therefore, the duty exemption under CN 21/2002, Sl. No. 217, should apply to the MGO. Additionally, the consumption of consumables during the voyage was deemed as operations in connection with petroleum activities, warranting duty exemption.

4. The Department, represented by Shri S.P. Rao, acknowledged the similarity of facts with the Transocean Discoverer case. The Tribunal found the facts of both cases aligned and hence ruled in favor of the appellant, granting duty exemption for the imported MGO and consumables during the voyage.

5. In conclusion, the Tribunal allowed the appeal, providing consequential reliefs, if any, and pronounced the operative part of the order at the conclusion of the hearing. The judgment established the correct classification of the imported MGO, upheld the duty exemption eligibility, and recognized consumption during the voyage as part of operations related to petroleum activities.