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TMI Blog2002 (3) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... ion from basic duty in excess of 30% and completely exempts additional duty. The exemption is subject to the condition that the importer produce at the time of clearance of the goods a certificate issued by the Member Secretary of the Empowered Committee on the Indigenisation of Oilfield Equipment and Services of the Ministry of Petroleum and Natural Gas, Government of India, certifying that the said goods are essential for on-shore oil exploration or exploitation. The table to the notification lists 45 items, including oilfield chemicals . It is under this heading that the exemption was claimed. 2. The department noted that molecular sieves were nothing other than the synthetically produced crystalline metal alumino silicates that have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ploitation begins from preliminary survey and continues till final marketing of the product. Molecular sieves are considered to be oilfield chemicals in the book Specifications for Oilfield Chemicals, 1991 published by the Institute of Drilling Technology of the ONGC. The essentiality certificate dated 6-10-1994 produced at the time of importation cannot be questioned and has to be accepted. It was not correct in the light of this certificate which has been affirmed by the Board on an enquiry from the department to rely upon another certificate of the IIP thereafter. The opinion of the Head of the Department of Petroleum Engineering, Indian School of Mines, Dhanbad is also relied upon. Departmental Representative reiterates the reasoning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oil. 5. They are not used at any stage during drilling operations but used in subsequent processing stages for drying of gas which has already been separated from oil. 6. This opinion was referred to the OIDB, which was asked to withdraw the certificate it was issued. OIDB declined to do so. In its reply dated 7-8-1995 to the Dy. Collector of Customs it explained that the sieves were used for oil exploitation activities and not for oil exploration during oil drilling and production In the present case molecular sieves finds its application for process chemicals and dehydration of saturate hydrocarbon streams and chemical serves essentially as an oilfield chemical used by ONGC in their exploitation activities for separation of water ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph the material part of the notification. The disposal of this appeal therefore, also requires an answer to two questions; whether molecular sieves are oilfield chemicals and they hence been imported in connection with the purpose of on-shore oil exploration or oil exploitation. 9. It is not possible for us to accept that the certificate of the Empowered Committee of the OIDB alone would be sufficient to decide the issue. The notification makes exemption subject to the condition of certification by the Committee that the goods are essential for onshore oil exploration or exploitation. The certificate of the Committee therefore, would be determinant to whether they are required for oil exploration or exploitation. Once the certific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment has held oilfield chemicals to be those which are essential for oil exploration consisting normally of the following categories : (1) mud additives, (2) cement additives, (3) production chemicals, (4) water injection chemicals, (5) process chemicals, (6) well stimulation chemicals; and said that molecular sieves cannot be considered as falling under any of the following categories. This information was communicated to the Empowered Committee. However, in its reply, the Committee has said that the definition of oilfield chemicals mentioned in Paragraph 3 of that Institute s letter is an assumption. This point has to be accepted. No authority has been cited by the IIP, to say why oilfield chemicals should be limited to those categories ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een shown that it had an academic independence from the Corporation which would justify relying upon this definition. 13. Evidence was also produced by the importer that molecular sieves are capable of being used in oilfields. They are used for adsorption of gas and there is nothing o show that it could not be used for such a purpose in an oilfield from which natural gas emerges. They are therefore oilfield chemicals. This was in fact one of the contentions taken before the Commissioner. 14. On balance therefore we are of the view that the goods were oilfield chemicals, entitled to the benefit of the notification. Therefore the confiscation and penalty was not called for. Even otherwise there were no cause for confiscation and penalty. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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