TMI Blog2018 (3) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... he SEZ as export, the vessels were not converted to coastal run vessels. The provisions of SEZ Act, 2005 and the Rules made thereunder is clearly not applicable to assess the duty free bunkers received and later used for costal run. Appeal allowed by way of remand. - C/Cross/46-49/2011-SM Appeal No. C/43-46/2011-SM - Final Order No. A/ 10432-10435 /2018 - Dated:- 7-3-2018 - Dr. D. M. Misra, Member (Judicial) For the Appellant : Mr. A. Mishra (A.R.) For the Respondent : Mr. J.C.Patel, Ms. Shilpa Balani (Advocates) ORDER Per : Dr. D.M. Misra: These four appeals are filed by the Revenue against order-in-appeal No. 159-162-Commr(A)-JMN-2010 passed by the Commissioner of Customs (Appeals) Jamnagar. Even though common question of law is involved, the facts are marginally different, hence, narrated separately. Appeal No. C/44/2011 2. Briefly stated the facts of the case are that the first respondent M/s Reliance Industries Ltd. was the charterer of the vessel MT Sinar Agra. On 09.06.2008, the said vessel was at port Qasim and arrived at Port Sikka on 20.06.2008 at 06:48 hours. On 20.06.2008 they addressed a letter to Superintendent of Customs informin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssel at Sikka Port from Mumbai on 08.06.2008. Later, the vessel took on Board duty free bunkers from M/s Adani Enterprises against shipping Bill No. 145 dated 06.06.2008, furnace oil 299.755 MT and under shipping bill No. 152 dated 06.06.2008, HSD 89.800 MT, which were supplied on 08.06.2008. The master of the vessel on 09.06.2008 requested the superintendent of Customs to convert the vessel from foreign trade to coastal trade and declared the estimated consumption of bunkers for subsequent 10 days and also furnished the details of stores available on Board. The vessel was converted into coastal vessel at 2:45 hours on 09.06.2008. The respondent M/s Atlantic Shipping Pvt. Ltd. filed the bill of entry No. F/23 dated 10.06.2008 in respect of the bunkers and provisions estimated to be consumed by the said vessel during the coastal voyage for next 10 days. The bill of entry was provisionally assessed on 10.06.2008 by the superintendent of customs and the customs duty of ₹ 13,02,685/- was paid by the said agents on 03.07.2008 against challan No. 127 dated 03.07.2008. Alleging that journey between Mumbai to Sikka cannot be considered as the foreign voyage and the status of the vess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very of the customs duty from the respondent. It is his contention that merely because the goods were cleared from SEZ ipso facto cannot oust the jurisdiction of the customs authority when the duty free bunkers were delivered to be used in the vessel, which was initially declared for foreign voyage but later converted to coastal run. In support of his contention the Ld. AR referred to the judgment of Hon ble Gujarat High Court in the case of UOI vs Oswal Agricomm Pvt. Ltd. 2011 (268) ELT 21 (Guj.) and Diamond and Gem Development Corpn. Vs UOI 2011 (268) ELT 3 (Guj.). 6. Ld. Advocate Sh. J.C. Patel for the Respondent has submitted that on the arrival of the vessel MT Sinar Agra at Port Sikka on 20.06.2008 at 6:48 hours, it was initially kept on standby to undertake a foreign voyage for BENZENE Cargo. While the said vessel was engaged at Sikka on 20.06.2008, it had received duty free bunkers supplied by M/s Adani Enterprises Ltd., SEZ Unit Mundra, which were cleared by the SEZ Unit against shipping bill No. 181 dated 19.06.2008. The said duty free bunkers were received at the vessel for consumption during its voyage as a foreign going vessel. It is his contention that though initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fuel oil and 90 MT of HSD for consumption of such foreign voyage. While, the vessel was at Sikka on 08.06.2008, it received duty free bunkers from Adani Enterprises Ltd. Mundra SEZ Unit, under shipping bill No. 145 dated 06.06.2008 and 152 dated 06.06.2008. The said duty free bunkers were received for consumption during voyage of the vessel as a foreign going vessel. Though initially it was planned that the vessel MT High Spirit would make a foreign voyage, on account of a failure of its cargo pumps, the foreign voyage was cancelled and it was used for coastal run to Hazira on 11.06.2008. The vessel was converted to coastal run on 09.06.2008 following the laid procedures. The necessary certificate of inventory of the ship stores, bunkers were issued by the Master of the vessels which was carried out in the presence / supervision of the Preventive Officer of Customs. Since the vessel proceeded for a coastal run bill of entry No. F/23 dated 10.06.2008 was filed with Customs Department in respect of the bunkers to be consumed during coastal run, by the Respondent no.2. 8. He has submitted that the bunkers were cleared as exports without payment of duty from the SEZ unit under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eviable not under the Customs Act but under Section 30 of the SEZ Act, 2005. On merits, the Ld. Advocate has submitted that the SCN proceeded on a misconception that to be eligible to receive duty free bunkers which are to be consumed when the vessel is a foreign going vessel, the vessel must also be a foreign going vessel at the time of bunkers are received on Board of the vessel. The Ld. Commissioner (Appeals) ought to have held that Section 86 (2) of the Customs Act, 1962 should have read with Section 87 of the said Act which clearly provides that imported stores may be transferred to any vessel as stores for consumption thereon during the period such vessel is foreign going vessel. He should have accordingly, held that it is not necessary at the time when the stores are transferred to a vessel, it should be a foreign going vessel. The transfer may be to any vessel, but the consumption of the stores must be during the period when the vessel is a foreign going vessel. He has further submitted that the Ld. Commissioner (Appeals) erred in holding that Section 86 of the Customs Act, 1962 does not apply to the present case because the stores were not imported on the vessel MT Sinar A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be used in the coastal run of the said vessels and discharged duty. It is illogical and incorrect to say that the goods which were received from the SEZ on a declaration that the same would be used in the vessels meant to undertake a foreign voyage, and if the foreign voyage is cancelled then the assessment made earlier by the SEZ authority be considered as a DTA clearance and accordingly it should be assessed under Section 30 of the SEZ Act,2005 revising earlier assessment being cleared as an export. On the other hand, once, the goods are received in the vessel, and later the vessel is converted to a coastal run vessel, the duty is required to be paid on the bunkers received duty free on such conversion to coastal vessels i.e. on subsequent development. Therefore, following the appropriate method/route, the respondent M/s Reliance Industries Ltd. had filed bill of entry and discharged duty provisionally on the bunkers to be used on coastal run. In such scenario, when the Respondents have themselves submitted to the jurisdiction of the customs to assess the bunkers received duty free from the SEZ unit, but to be used in coastal run, then to hold that the customs authorities has no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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