9911796707
TMI Blog2002 (5) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants to set up a 100% EOU at Kutch in the State of Gujarat for the purpose of pipe coating with an annual capacity of 125 kms. and the conditions attached to the permission provided that 50% of the production shall be physically exported and remaining 50% shall be supplied to ONGC/GAIL under Global Tendering Scheme. This permission was based upon the appellants application dated 20-11-92. In May, 1993, the appellants were allowed to set up the unit in the Kandla Free Trade Zone and the Development Commissioner, KFTZ stated in the letter of permission that all the terms and conditions stipulated by the FIPB while approving the project as an 100% EOU would remain the same. Based on the above permission, the appellants executed an agreement with the Government of India in Nov., 1993, according to which the appellants could import capital goods, raw material, components etc. without payment of customs duty. In June, 1994, the Central Government issued Notification No. 133/94 granting exemption to machinery, raw materials, capital goods etc. imported into India for the production of goods for export out of India by units within the KFTZ. Based upon the permission and the agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of main land in the country. In fact, this has been accepted by Part No. 1 in their submissions dated 29-1-98 where they have accepted that these pipes are to be utilised for conveying/transporting natural gas under water and hence are known as sub-marine pipelines. The parties have filed to point out and establish whether any percentage of the goods has actually been exported/used beyond the territorial waters of India. (b) The examination and scrutiny of Shipping Bills submitted by the parties reveal that the consignee in the S/Bills has been shown as Oil and Natural Gas Corporation Ltd., Maker Tower, Cuffe Parade, Bombay. The port of discharge in all the S/Bills place of delivery (if on carriage) has been mentioned as Bombay High but the party has not been able to substantiate that the goods were taken from the Port of discharge on carriage to any other place which can be counted as export. In fact, I have come across the correspondence letter D.O. No. MRBC/MSD/ENC/31/98, dated 30-1-98 which is written by Sri R.C. Gourh, Director (Technical), Oil and Natural Gas Corporation, Tel Bhavan, Dehradun to Member, Central Board of Excise and Customs, Ministry of Finance, Department o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime of clearance from the appellants factory, Engineers India Ltd., a testing agency nominated by ONGC checked the pipes and thereafter the pipes were delivered to ONGC through laying contractor. These affidavits also clearly describe the length of pipes supplied by the appellants and the position where these pipes were laid by ONGC. After taking into account various factors, the Bench granted stay on 18-7-2001 and liberty was given to the respondent-Commissioner to file counter reply/affidavit in respect of the affidavits of ONGC. However, no reply or affidavit was filed by the Commissioner. Hence they stand unrebutted. 4. Coming to the details of coated pipes supplied to ONGC for ICP-Heera Project, the project consisted of : (a) laying of 30 dia pipeline from ICP platform to Heera Platform length of pipeline being 141.7 kms. (b) laying of 20 dia pipeline connecting a place called SHP platform to main ICP-Heera pipeline at a place called SL-3 PLEM location. Length of this connection pipeline is 11.2 kms. The entire pipeline laid was beyond the territorial waters of India and were non-designated areas during the period of delivery. All the coated pipes for the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as imports. Conversely, if anything is supplied from India to the non-designated area, the same would be treated as export . The above circular was again reiterated by the CBEC vide another circular No. 450/76/93-Cus. IV, dated 27-3-1995 (page 435, Vol. 3). In this circular, the CBEC also annexed the list of the designated areas. By a telex dated 31-5-1996 (page 397, Vol. 3) relating to this very case, CBEC specifically clarified in para 5 to the Commissioner of Customs, Kandla in response to the representation made by the appellants to the effect that supplies to ONGC installations beyond territorial waters and to non-designated areas constitute exports. The relevant extract of the Telex is as under : (4) Regarding Export Obligation supply of goods to ONGC/GAIL against free foreign exchange and in terms of specific approvals given to the units by Board of Approval for such supply would count towards fulfilment of export obligation. (5) In addition, supplies to ONGC installations beyond territorial waters and situated in non-designated co ordinates would be considered as exports. Therefore, the supply of coated pipes to ONGC which have been ultimately laid beyond territo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any area of the exclusive economic zone to be a designated area and make such provisions as it may deem necessary with respect to, inter alia, customs and other fiscal matters in relation to such designated areas. In exercise of the powers conferred under sub-section (5) of Section 6 and sub-section (6) of Section 7 of the Act, the Central Government issued a Notification S.O. 429(E), dated 8-7-1986 (Vol. 3, page 482). In this notification, the Central Government declared that the areas mentioned in the Schedule to the notification and falling within the continental shelf or the exclusive economic zone of India are designated areas for the purposes of the said sections. The Schedule to the notification indicated the name of the platforms at the Bombay High and the coordinates of the same. Thus, by virtue of this notification issued under the 1976 Act, even those areas which fell outside the territorial waters of India, being beyond 12 nautical miles from the appropriate baseline, were declared as designated areas and were treated as part of India. Any platforms which fall outside these designated areas are treated as outside India. The relevant platforms in question were subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f permission wherein the appellants were required to export 50% of the goods only. 9. Notification No. 133/94-Cus. grants complete exemption to capital goods etc. imported into India for manufacture of goods subject to the condition that the goods so manufactured are exported out of India. However, para 3 of the Notfn. No. 133/94-Cus. makes an exception. This para states that even if the goods are not exported out of India but are cleared within India in terms of policy, on payment of duty of excise, the customs notification will be still applicable to the capital goods etc. imported by the FTZ unit. The relevant portion of Notfn. No. 133/94-Cus. is extracted below : 3. Notwithstanding anything contained in the notification, the exemption contained herein shall also apply to the said goods which on importation into India are used for the purposes of production, manufacture, processing or packaging of articles in a unit in the Zone and such articles (including rejects, waste and scrap material arising in the course of production, manufacture, processing or packaging of such articles) even if not exported out of India, are allowed to be cleared outside the Zone under and in acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... why the goods were assessed to Nil duty. In any case, customs duty cannot be denied to the imported goods on the ground that excise duty is payable on the finished goods cleared to DTA. 11. The finding that the pipes are lying in the Panvel stock yard of ONGC is beyond show cause notice and factually incorrect. The finding of the Commissioner in the impugned order by relying on the letter dated 30-1-98 written by CBEC is beyond the show cause notice. This evidence has not been referred to or relied in the show cause notices issued to the appellants. For the first time in the impugned order, this evidence has been cited without putting the appellants on notice. There is no evidence in the impugned order that the very coated pipes manufactured and supplied by the appellants were lying in the stock yard of ONGC. On this ground also, the impugned order alleging that the pipes are not exported and are lying in the stock yard is incorrect and not sustainable. In any case, the affidavits of ONGC filed before the CEGAT conclusively prove and establish that all the pipes manufactured and supplied by appellants to ONGC were laid beyond territorial waters for the purpose of transportation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, in 1995. The imports in the present case were made during May, 1994 to March, 1995, before the enactment of Section 28AA. Hence, no interest is leviable in the present case. Section 28A can be invoked when the duty is determined under Section 28(2) of the Act. In the present case, the assessments were made on provisional basis and by the impugned order, the assessments are sought to be finalized under Section 18. Therefore, the demand under the present case is under Section 18 of the Act and not under Section 28 of the Act. For this reason also, interest under Section 28AA is inapplicable. 15. As observed by us earlier, the adjudicating authority has not rebutted or filed any reply to the affidavits filed by the ONGC, in spite of opportunities being extended for this purpose. Hence, we accept the contents thereof as correct and accordingly held that barring 25.746 kms length of pipes laid within 12 nautical miles, the coated pipes have been exported out of India. The appellants contention that the quantity of 25.746 kms of pipes laid within 12 nautical miles is within the limitation of 25% of production permitted to be sold in India as para 102(b) of the Import-Export Polic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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