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TMI Blog2009 (11) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... that the fishing, trawlers had received bunkers and failed to follow the procedure prescribed in Public Notice No. 172/2002 by their not reporting to the authorities at Visakhapatnam and renewing the fishing passes. The offending transactions took place at Visakhapatnam Port. These vessels had not reported the balance quantity of duty free bunkers that remained onboard the vessels when they called at the Visakhapatnam Port. Therefore, Commissioner, Visakhatpanm had jurisdiction to decide the dispute. The offence found against the appellants is that it imported HSD and consumed on coastal run without following any statutory formalities. The appellants did not subject itself to the jurisdiction of the customs as regards the impugned bunkers as prescribed in the Public Notice issued by the Commissioner of Customs. HSD imported was consumed in plying chase boats without fulfilling the conditions for any exemption. Matter remanded to the adjudicating authority to readjudicate the issue - appeal allowed by way of remand. X X X X Extracts X X X X X X X X Extracts X X X X ..... corroborated by a commission agent, one Srinivasa Rao, who arranged such bogus purchase bills. As per the guidelines issued by the Ministry of Food Processing Industries, mid-sea bunkers received should be used only in the area beyond 24 nautical miles. As per Notification No. SO 189(E) dt. 11-2-2002, of the Ministry of External Affairs, for the purpose of Customs Act, EEZ and Continental Shelf of India formed part of India. Bringing of goods into the EEZ or Continental Shelf of India in connection with any activity related to mineral oil extraction or production shall be treated as import under the Act as per the Notification No. S.O. 189(E). Both Customs Act and Customs Tariff Act applied to transactions relating to mineral oil extraction/production in the said region. Statements were also recorded from the executives of SSCL after showing them the records recovered from various agencies during investigation. It appeared that SSCL had received a quantity of 322.985 MTs as mid-sea bunkers involving customs duty of Rs. 29,43,805/- which had been unloaded at a place other than the customs port appointed under the Act and brought into Indian Customs waters without intimating authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The so called foreign going vessel was located within the territory over which the coastal State had complete control and had sovereign right to extend its fiscal law. Reference to the vessel being a foreign going vessel was of no consequence and customs duty was leviable as the stores consumed were within the territory to which Act had been extended as per the Maritime Zones Act, 1976. The Apex Court observed that reading Sections 6 & 7 of the Maritime Zones Act, 1996 made it clear that India's jurisdiction over the Maritime Zones Act, 1976 extended to the Continental Shelf and the EEZ. In the case on hand, the Commissioner found that SSCL were liable to pay customs duty on 209.500 K.Ltrs. (179.975 MTs) of bunker consumed by the fishing trawlers when they plied as chase boats and when they were not engaged in fishing. Their journeys in the EEZ had to be considered as on coastal run since EEZ was within Indian territorial waters. Relying on the statements of bunk owners on the mainland and commission agent Shri Srinivasa Rao, the Commissioner found that SSCL used fake bills to show duty free bunkers received as indigenous fuel and had manipulated the BDRs for the purpose. The C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by SSCL as mid-sea bunkers for the purpose of fishing and used for other purposes as chase boats with intention to avail undue exemption under Section 111(a) & (d) of the Act inasmuch as the same had been brought into Indian customs waters, unloaded at unauthorized places and consumed within EEZ without following statutory formalities. For evading customs duty, penalty of equal amount of duty was imposed on SSCL under Section 114A of the Act. The Commissioner found that Shri S.K. Agarwal, besides being Managing Director of SSCL had also obtained fake bills as per the several statements recorded under Section 108 of the Act. Penalty under Section 112 to the extent of Rs. 2 lakhs was imposed on Shri S.K. Agarwal for having rendered the bunkers received duty free liable for confiscation. 3. In the appeal before the Tribunal, the appellants have presented the Revenue's case as follows. SSCL had manipulated purchase bills of HSD from petrol bunks to avail inadmissible duty exemption on foreign bunkers received for their fishing trawlers deployed for activities such as chase boats/guard vessels in connection with mineral oil extraction or production. Revenue also found tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied only to the Continental Shelf and the EEZ where oil extraction/production took place. This Notification reads as follows :- "In exercise of the powers conferred by clause (A) of sub-section (5) of Section 6 and Clause (a) of sub-section (6) of Section 7 of the territorial waters, Continental shelf, Exclusive Economic Zone and other Maritime Zone Act, 1976, the Central Government hereby extends the Customs Act, 1962 and Customs Tariff Act, 1975 to the Continental Shelf of India and the Exclusive Economic Zone of India w.e.f. the date of publication of this Notification in the Official Gazette for the following purposes namely; (i) the prospecting for extraction or production of mineral oils in the continental shelf of India or the Exclusive Economic Zone of India and; (ii) the supply of any goods as defined in clause (22) of Section 2 of the Customs Act, 1962 in connection with any of the activities referred to in clause (i). Explanation - For the purpose of this Notification "mineral oils" include "petroleum and natural gas". 3.2 It is submitted that the appellants had not utilized the bunkers for prospecting for extraction or production of mineral oil. The vess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the jurisdiction of the Act did not extend beyond the territorial waters. The appellants denied use of fake bills. The Commissioner had wrongly relied on the decision in Aban Loyd Chiles Offshore Ltd. case (supra) as the question considered therein was whether oil rigs engaged in operations in the EEZ/Continental Shelf were foreign going vessels and found that the oil rigs were stationed in the designated areas of the EEZ/Continental Shelf. The Hon'ble Supreme Court considered the Notification No. SO 189(E) dt. 11-2-2002 and found that the stores had been unloaded and consumed within the limit of Act and constituted import. It was not the Revenue's case that the stores had beer unloaded within the customs limit. Therefore, the finding of import was not correct and sustainable. Therefore demand of duty under Section 28 was not sustainable. The demand of interest, liability to confiscation and penalties found in the impugned order are also challenged. 4. Heard both sides. We have carefully considered the case records and the rival submissions. The case of the Revenue is that during the material period the appellants received non-duty paid bunkers for fishing trawlers which were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner could not have demanded duty on bunkers received by vessels plying in the EEZ beyond territorial waters off the coast in his jurisdiction. However, we hold that the subject bunkers were not entitled to the exemption under Sl. No. l & 24 of List 12 of Notification No. 21/2002 in the absence of Essentiality Certificate issued by the DGHC covering them as prescribed in the notification. 4.2 The Commissioner found that the fishing, trawlers had received bunkers and failed to follow the procedure prescribed in Public Notice No. 172/2002 by their not reporting to the authorities at Visakhapatnam and renewing the fishing passes. The offending transactions took place at Visakhapatnam Port. These vessels had not reported the balance quantity of duty free bunkers that remained onboard the vessels when they called at the Visakhapatnam Port. Therefore, Commissioner, Visakhatpanm had jurisdiction to decide the dispute. We find that as per the impugned order, the Commissioner reliably found that several vessels had called at Visakhapatnam Port with non-duty paid bunkers on board and sailed for chase boat duty. We have no doubt that the official records of VPT maintained in its day to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity certificate issued by DGHC in respect of the impugned bunkers in terms of Notification No. 21/02-Cus. The plea of limitation is canvassed on the basis that similar facts were involved in an earlier proceeding. We find in this regard that those proceedings covered bunkers received in the sea beyond the jurisdiction of the Commissioner of Customs, Visakhapatnam and allegedly consumed beyond the territorial waters of India. The dispute is pending decision by the Tribunal. In the case on hand, the offence found against the appellants is that it imported HSD and consumed on coastal run without following any statutory formalities. The appellants did not subject itself to the jurisdiction of the customs as regards the impugned bunkers as prescribed in the Public Notice issued by the Commissioner of Customs. HSD imported was consumed in plying chase boats without fulfilling the conditions for any exemption. 5. In the circumstances, we remand the matter to the adjudicating authority to readjudicate the issue. We sustain the finding that duty is liable to be paid on those bunkers as we have observed in the preceding paragraphs. Amount of fine and penalty on SSCL shall be adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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