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Issues:
Customs duty on line pipes used in designated and non-designated areas. Analysis: The appellants imported line pipes for an oil production project, with some segments to be installed in non-designated areas. Customs initially allowed transhipment of some pipes to non-designated areas without duty. However, later, duty was demanded on the entire quantity of line pipes. The appellants argued that Customs Act and Customs Tariff do not apply to non-designated areas and that the value of line pipes in meters can be quantified. They also pointed out the precedent of cables being exempt from duty beyond territorial waters. The Revenue contended that customs-made line pipes cannot be portioned for duty as they connect designated areas. The Tribunal noted the government's power to declare designated areas and extend customs laws to them. Notifications declared certain areas as designated, making them part of India under customs laws. In the specific case, out of 11 segments imported, one was for non-designated areas not subject to duty. The remaining segments connected designated areas, with part passing through non-designated areas. The Tribunal found merit in the appellants' argument that duty should apply only to line pipes used in designated areas. Evidence showed only a portion of the line pipes needed to be in designated areas. The Commissioner's order not demanding duty for non-designated area pipes was accepted by the Revenue, indicating acceptance of duty applicability. Therefore, the Tribunal set aside the order, allowing the appeal based on the distinction between duty liability for designated and non-designated area line pipes.
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