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Pragathi Sea Foods Ltd. and others Versus CC, Visakhapatnam-Cus

2017 (1) TMI 134 - CESTAT HYDERABAD

Jurisdiction - whether the Customs officers of Visakhapatnam were proper officers for the area of Continental Shelf of India and Exclusive Economic Zone and consequently had jurisdiction to issue the show cause notice or confirm the demand or impose penalties? - Held that: - Following the decision in Sagarika Sea Crafts [2009 (11) TMI 745 - CESTAT BANGALORE], I am of the view that facts being identical the Customs Authorities of Visakhapatnam has no jurisdiction during the relevant period t .....

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hase boas, beyond the territorial waters of India. It is for this very reason alone, I find that the order of the Additional Commissioner is liable to be set aside. - Demand set aside - appeal allowed - decided in favor of appellant. - C/755/2007-767/2007, C/769/2007 to 782/2007, C/1687/2010 to 1690/2010 - A/31282-31312/2016 - Dated:- 30-11-2016 - Ms. Sulekha Beevi, C.S., Member(Judicial) Shri. V.M. Doiphode, Advocate for the Appellant. Shri. Nagraj Naik & Shri. Arun Kumar, Deputy Commis .....

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nadh Associates, Dwaraka Sea Foods, B.G.K. Murthy M. Partner M/s. Dwaraka Sea Foods, Anzara Marines, Abdul Rasheed, T. Sekhar Magaging, CC & ST- Visakhapatnam-Cus ORDER The issue involved in these appeals being the same, they are disposed by this common order. In the above appeals, some are main appellants and others are partners/directors of the main appellants who are owners of Fishing Trawlers. The appeals Nos. C/761 to 767, 769,771 to 782/2007 were heard on 17.10.2016 and appeals Nos. C/ .....

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as Chase Boat in connection with Oil exploration activities being carried out by M/s. ONGC Ltd., and M/s. Reliance Industries Ltd. The Assessee were issued Fishing Pass and NOC from Customs for getting duty free mid-sea bunkers under section 87 of the Customs Act, 1962. The mid-sea bunkering facility was granted by the Ministry of Food Processing Industries to the Fishing Trawlers as an incentive to encourage and develop the fishing industry. The Assessee were also granted the security clearanc .....

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ntal study operations conducted by ONGC and Reliance Industries Ltd., conducted investigations and issued Show Cause Notices proposing confiscation of bunker quantity under section 111(d) and 111(o) of the Customs Act, 1962, demanding customs duty under section 28(1), interest under section 28AB and imposition of penalty under section 117/114A and 112(a) of the said Act on the following main grounds: i) Duty free bunkers for fishing purposes was diverted for use in oil exploration activity. ii) .....

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2-Cus. dated. 23.04.2002 bringing of any goods from any other country to any place in EEZ or continental shelf of India in connection with any activity related to extraction or production of mineral oils, shall be treated as import under the Customs Act, 1962 and would be charged to duty accordingly. iv) By diverting the mid-sea duty free bunkers by reasons of collusion or willful mis-statement or suppression of facts, extended period is invokable and mid-sea duty free bunkers received by fishin .....

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th interest and penalties, but however, reduced the penalty imposed on individuals. Hence the assessee are now before the Tribunal. 4. The Commissioner (Appeals) in impugned order in appeals Nos. 1687/2010 to 1690/2010 set aside the duty demand, interest and penalty holding that the fishing vessels would fall under the definition of foreign going vessel or aircraft as defined under Section 2(21) (ii) of the Customs Act, 1962. Being aggrieved, the department has filed the appeals. 5. On behalf of .....

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mmissioner of Customs (Gen.), Mumbai, Commissioner of Customs (Imports), Nhava Sheva, etc. are appointed as Commissioner of Customs for areas specifically including designated area in the Continental Shelf of India and Exclusive Economic Zone (EEZ) and declared by the Govt. of India form time to time. Thus, the Customs officers of Visakhapatnam were not proper officers for the area of Continental Shelf of India and Exclusive Economic Zone and consequently had no jurisdiction to issue Show Cause .....

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isdiction of Commissioner of Customs, Visakhapatnam does not include EEZ. Therefore, the Jt. Commissioner of Customs could not have demanded duty on bunkers received by Trawlers in Continental Shelf of India and EEZ. iii) The Assessee/trawlers were not directly or indirectly connected with the prospecting for extraction or production of mineral oils in the Continental Shelf of India or the Exclusive Economic Zone of India. Such activities are conducted only by specially designed seismic vessels .....

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r undertaking activity as chase boat. Ministry of Shipping, Road Transport and Highways Department vide letter dated. 20. 09.2005 had clarified that fishing trawlers are permitted to undertake the activity such as rescue, co-ordination support in line with the fishing activity and therefore the activity undertaken by the fishing trawlers is in line with fishing activity and they had rightly availed the benefit of duty free bunkers as stores under section 87 of the Customs Act, 1962. v) The Ld. C .....

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apart from chase boat they have undertaken fishing. There is no evidence that the fishing trawlers were not used for fishing activity. vii) All the demands are time barred having issued beyond the period of 6 months as Assessee had undertaken the activity with proper permission from Indian Navy and Department of Agriculture and Assessee were under bonafide belief that as they are also simultaneously doing fishing while working as chase boat. Assessee had also purchased diesel oil on payment of .....

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ost two months prior to engagement of fishing work were used while working as chase boat. 6. The Ld. AR, Shri. Nagraj Naik and Shri. Arun Kumar appearing for the department reiterated the findings in the impugned order and also the grounds stated in the appeals filed by department. They strongly relied upon the judgment rendered in Pride Foramer Vs. UOI [2002 (148) ELT 19 (Bom)] and the case of Aban Loyd Chiles Offshore Ltd., Vs. UOI [2008 (227) ELT 24 (S.C.)]. It was submitted that Commissioner .....

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Visakhapatnam were not proper officers for the area of Continental Shelf of India and Exclusive Economic Zone and consequently had no jurisdiction to issue the show cause notice or confirm the demand or impose penalties. The Ld. Counsel relies on the judgment passed in the case of Sagarika Sea Crafts Ltd., Vs. CC, Visakhapatnam [2010 (261) ELT 825 (Tri. - Bang.)]. The Co-ordinate Bench of the Tribunal in the said case of Sagarika Sea Crafts Ltd., has analyzed the issue of jurisdiction and has he .....

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d therefore fuel consumed in connection with such activities was import into India and duty was chargeable. In holding this view, the Commissioner relied on the judgment of the Apex Court in M/s. Aban Loyd Chiles Offshore Ltd. case (supra). The Commissioner held that the liability to duty on the impugned fuel arose at the time of its consumption during the operations other than fishing, activities in the EEZ. We find from the decision of the Tribunal in Noble Asset Company Ltd. case (supra) that .....

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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. 9. The Tribunal in the above case has distinguished the judgment in M/s. Aban Loyd Chiles Offshore Ltd., 2008 (227) ELT 24 (S.C.) relied by department, where the judgment rendered by Honorable High Court of Bombay in .....

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higher authority. Following the decision in Sagarika Sea Crafts [2010 (261) ELT 825 (Tri. - Bang)], I am of the view that facts being identical the Customs Authorities of Visakhapatnam has no jurisdiction during the relevant period to issue show cause notice and confirm demand or impose penalties. 10. The Commissioner (Appeals) in the orders impugned in appeal Nos. 1687 to 1690 has held that the fishing trawlers are foreign ongoing vessel and therefore the duty demand is not sustainable. The rel .....

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