2022 (1) TMI 523 - AT - Customs

Benefit of Exemption - Rig trident imported in April 1988 - benefit of Notification No. 516/86 dated 30.12.1986 on the strength of the essentiality certificate issued on 21.12.2011 much after the validity of the notification - HELD THAT - In the instant case, the impugned goods were imported in 1988 and the goods were seized and such seizure was upheld by this Bench and was affirmed by the Apex Court. The appellants were not in the possession of the essentiality certificate at the time of import or at the time of filing of Bill of Entry; the essentiality certificate was applied and issued at a much later date after the expiry of the Notification and there too by a different authority which was not prescribed under the Notification claimed. Therefore, the facts of the cases referred are different and therefore any reliance placed upon them would not lead to a correct decision. In the instant case, the Bill of Entry was not filed; essentiality certificate was not applied for at the time of import. The impugned Rig was seized and such seizure was held by this Bench and was affirmed by the Apex Court. The Bill of Entry was filed on 02.03.2001 and the Bill of Entry was finally assessed. In the cases cited by the learned counsel for the appellants, the assessments were provisional and the certificates were produced before finalization of the assessment - in the impugned case the appellants neither applied for the essentiality certificate nor were in the possession of the same at the time of import. The impugned rig was seized for various violations and the same was upheld by this bench and affirmed by the Apex Court. The impugned goods herein have the taint of being smuggled. Therefore, the same cannot be treated to be normal imported goods as in the cases relied by the appellants. It is found from the records of the case that the conditions of the Notification are also not satisfied, even assuming that the conditions of Notification existing as on the date of filing the Bill of Entry would have to be satisfied. Therefore, there are no merit in the alternate claim also. The appeal is devoid of any merit and is liable to be set aside - Appeal dismissed.

Issues Involved:

1. Confiscation of Rig Trident-II under Section 111 of the Customs Act, 1962.
2. Denial of exemption under Notification No. 516/86-Cus dated 30-12-1986.
3. Validity of Essentiality Certificate issued post-rescission of Notification No. 516/86-Cus.
4. Alternative claim for exemption under Notification No. 17/2001-Cus dated 1-3-2001.
5. Bar of limitation and unjust enrichment in refund claims.

Detailed Analysis:

1. Confiscation of Rig Trident-II under Section 111 of the Customs Act, 1962:

The appellants imported Rig Trident-II in 1988 for offshore oil exploration under a contract with ONGC. The Rig was towed by M.V. Mighty Servant-2, and there was ambiguity about whether a Bill of Entry was required. Consequently, no Bill of Entry was filed, and the Customs department did not insist on it. The rig was operational from May 1988 to January 1998 under ONGC, and later under Enron and again ONGC. A Show Cause Notice was issued in July 1999 proposing confiscation under Section 111 for not filing the Bill of Entry. The Commissioner confiscated the Rig under Section 111, offering redemption on payment of ?15 Crores and imposing a penalty of ?5 Crores. The Tribunal reduced these amounts, and the Supreme Court admitted appeals from both parties.

2. Denial of exemption under Notification No. 516/86-Cus dated 30-12-1986:

The appellants argued that the Rig was imported for offshore oil exploration, fulfilling the eligibility clause of Notification No. 516/86-Cus. They cited Supreme Court judgments in ONGC Ltd Vs CC and CC Vs Tullow India Operations, which held that once the eligibility clause is fulfilled, conditions must be construed liberally. The Customs department contended that the Rig was smuggled, as it was brought without a license and removed without filing a Bill of Entry or Customs permission, making it confiscable under Section 111. The Tribunal noted that the appellants did not apply for the Essentiality Certificate at the time of import or filing of the Bill of Entry, and the certificate was issued much later by a different authority, not specified in the Notification.

3. Validity of Essentiality Certificate issued post-rescission of Notification No. 516/86-Cus:

The appellants obtained an Essentiality Certificate from the Director General of Hydrocarbons in December 2001, after the rescission of Notification No. 516/86-Cus on 31-12-1988. The Customs department argued that the certificate was invalid as it was issued by an authority not prescribed in the Notification. The Tribunal upheld this view, stating that the certificate must be issued by the authority specified in the Notification, and any deviation requires legislative approval. The Tribunal also noted that the appellants did not comply with the conditions of the Notification, making them ineligible for the exemption.

4. Alternative claim for exemption under Notification No. 17/2001-Cus dated 1-3-2001:

The appellants alternatively claimed exemption under Notification No. 17/2001-Cus. The Tribunal found that the conditions of this Notification were not satisfied. The Notification applied to contracts between the Government of India or State Government with ONGC or Oil India, issued or renewed after 1-4-1999. The appellants' contract with ONGC expired in 1994, and the conditions regarding foreign exchange remittance and the validity of the Essentiality Certificate were not met. Therefore, the alternative claim was also dismissed.

5. Bar of limitation and unjust enrichment in refund claims:

The Customs department argued that the refund claim was barred by limitation as it was filed after the statutory period. They also contended that the refund would result in unjust enrichment, as the Supreme Court had directed ONGC to reimburse the appellants for the Customs duty. The Tribunal did not address these issues in detail, as the primary claims for exemption were not maintainable.

Conclusion:

The Tribunal dismissed the appeal, upholding the confiscation of Rig Trident-II and denying the exemption claims under both Notification No. 516/86-Cus and Notification No. 17/2001-Cus. The Essentiality Certificate issued post-rescission was deemed invalid, and the appellants were found non-compliant with the conditions of the Notifications. The arguments regarding limitation and unjust enrichment were noted but not elaborated upon due to the dismissal of the primary claims.

← Previous Next →