TMI Blog2022 (1) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... as held by this Bench and was affirmed by the Apex Court. The Bill of Entry was filed on 02.03.2001 and the Bill of Entry was finally assessed. In the cases cited by the learned counsel for the appellants, the assessments were provisional and the certificates were produced before finalization of the assessment - in the impugned case the appellants neither applied for the essentiality certificate nor were in the possession of the same at the time of import. The impugned rig was seized for various violations and the same was upheld by this bench and affirmed by the Apex Court. The impugned goods herein have the taint of being smuggled. Therefore, the same cannot be treated to be normal imported goods as in the cases relied by the appellants. It is found from the records of the case that the conditions of the Notification are also not satisfied, even assuming that the conditions of Notification existing as on the date of filing the Bill of Entry would have to be satisfied. Therefore, there are no merit in the alternate claim also. The appeal is devoid of any merit and is liable to be set aside - Appeal dismissed. - Customs Appeal No. 19 of 2008 - A/85013/2022 - Dated:- 11-1-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 3 Crores made as per Tribunal s stay order. Appellants deposited an amount of ₹ 26,67,94,320/-, in February-March 2001, and informed vide letter dated 20-2-2001, that such duty was being paid without prejudice to their rights and subject to their right to apply for Essentiality Certificate to the Ministry of Petroleum and Natural gas and to claim refund upon getting such Certificate. Petitioners challenged department s steps to en-cash the Bank Guarantee of ₹ 50 Crores, by filing Writ Petition No.481 of 2001 in the Bombay High Court. Hon ble High Court restrained the department from en-cashing the Bank Guarantee. 4. ONGC applied to Ministry of Petroleum and Natural Gas for issuance of essentiality Certificate to enable the Appellants to claim exemption from duty under Notification No.516/86 Cus dated 30-12-1986, in force at the time of import of the Rig Trident-II in April 1988, submitting that the rig was continuously engaged in off-shore oil exploration-exploitation since 1988. Ministry of Petroleum and Natural gas issued letter 20th December 2001, to Director General of Hydrocarbons (DGH) stating that the request for issue Essentiality Certificate in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er that the Director General of Hydrocarbons was not the authority prescribed under the said Notification No.516/86. Commissioner of Customs (Appeals), vide impugned order, upheld the order of the Lower authority. Submissions of the appellant 6. Shri J.C. Patel, Advocate, appearing for the appellants, submits that theeligibility clause, which gives entitlement to the duty exemption, under Notification No.516/86 is that the goods should have been imported in connection with off-shore oil exploration or exploitation; it is settled law that an eligibility clause has to be strictly construed; this requirement is squarely met in the present case since there is no dispute at all about the fact that Rig Trident II had indeed been imported in connection with off-shore oil exploration/ exploitation; Supreme Court held, in the cases of ONGC Ltd Vs CC 2006 (201) ELT 321 (SC) and CC Vs Tullow India Operations- 2005 (189) ELT 401, that once the eligibility clause which requires strict construction is fulfilled, the condition must be construed liberally; the benefit of the exemption cannot be denied merely because the Essentiality Certificate was issued after the rescission of the No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to exist; however, the Ministry of Petroleum and Natural gas examined the case in consultation with IFD and approved Director General, Hydro Carbons, to be competent authority to issue Essentiality Certificate ex-post facto basis; Director General, Hydro Carbons, was also the authority under the Successor Notifications Nos.No.16/2000-Cus dated 1-3-200 and No.17/2001-Cus dated 1-3-2001; Ministry of Petroleum and Natural Gas has itself clarified, vide letter dated 26th July 2006, there was no irregularity in issuance of such EC on ex-post facto basis. He further submits, without prejudice to the aforesaid, that since the rate of duty applicable in the present case was the rate in force on the date of payment of duty (Feb-March 2001), under Section 15 (1) (c) of the Customs Act 1962 and the authority for issuing the EC under the successor Notifications, cited above, was clearly the Director General, Hydro Carbons; hence, the Essentiality Certificate issued was in order and exemption cannot be denied. Submissions by Authorised Representative 9. Learned Authorised Representative, appearing for the respondent department, submits vide oral and written submissions that the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of goods. Hon'ble Supreme Court -2002 (140) ELT A95 (SC) upheld the view. Further the case of Jagson International Vs CC -2006 (199) ELT 553, relied by the appellants, is also not applicable as the facts are different from the impugned case. 11. Learned Authorised Representative further submits that CESTAT, vide Final Order (Sedco Forex International Drilling Inc Vs CC 2001 (135) ELT 625 (T)), held that the Rig is confiscable under Section 111 (d), (h) and (i) thereof of the Customs Act, 1962; therefore, the rig is to be held to have been smuggled in to India in terms of Section 2 (39) of the CA, 1962; the goods were imported without a valid license violating the provisions in terms of paragraph 30 (1) of the Import Policy 1988-91.Bombay High Court endorsed this opinion vide their decision dated 22.03.2006 in W.P. no 481 of 2001 filed by the Appellant. Further Apex Court, in CC Vs Aban Lloyd Chiles Offshore Ltd. 2017 (346) ELT 513 (SC), held that, such a Rig, brought into India in such a manner, is confiscable under Section 111 of the CA, 1962. He submits that the benefit of an exemption notification cannot be extended to the Rig/goods smuggled into India as held by Apex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it was approved by the Integrated Financial Division (IFD) of the Ministry. He submits that each Notification issued under Section 25 of the Customs Act, 1962is placed before both Houses of Parliament for their Approval, in terms of Section 159 of the Customs Act, 1962; Director General is not a Committee; a decision which is to be taken by an Empowered Committee cannot be taken by an IFD of a ministry; IFD or an Under Secretary or a Deputy General Manager of the Directorate General of Hydrocarbon cannot assume to itself the powers of an Empowered Committee set up for a specified purpose; Notification 516/86-Cus has the same force and effect as a law made by Parliament; the very fact that, the said Empowered Committee was dissolved or not constituted and the Notification 516/86-Cus. was allowed to expire, together indicate the resolve of the Legislature and the Executive to not save any claim under the said Notification no. 516/86-Cus; the dictum that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all shall prevail He relies upon (i). Orient Weaving Mills (P) Ltd Vs UOI 1978 (2) ELT J311 (SC) (ii). Privy C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction; hence, the Certificate issued by the Deputy General Manager D.G. Hydrocarbons is non est and ab initio void. 15. Learned Authorised Representative also submits regarding the claim of benefit under Notification 16/2000-Cus Or 17/2001-Cus is not valid and not a Admissible; such plea was never made at any stage over the past 20 years; it was not even made vide written Submissions given during hearing before CESTAT on 15.10.2018; in terms of Rule 10 and 23 of the CESTAT (Procedure) Rules, 1982, no ground can be raised in Appeal without filing an Application in the prescribed Form, giving the opposite side time to file a reply and seeking permission from the Bench by an Order; no such Application has been filed; in any case, no such ground can be raised for the first time before CESTAT, as it was never raised before the Original or First Appellate Authorities. He also submits that Notification 16/2000- Cus is not applicable for the following reasons. (i). Notification 16/2000-Cus Notification 16/2000-Cus did not exist on the date of payment of duty; (ii). the Appellants are a Foreign Company and the Rig is classified under CTH 8905.20; (iii). duty was paid by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional exemption is a question of fact and not of law; a ground of Appeal involving even a pure question of Law cannot be entertained when the matter has reached finality and has been decided by a Superior Court; it has been so decided in Lindt Exports VS UOI 2016 (339) ELT 529 (Del.) (upheld in 2018 (361) ELT 283 (SC). He submits further that the claim is barred by Limitation; refund claim was made on 05.05.2002 for duties which were paid on 02.03.2001; as per the provisions of Section 27 (as existed during relevant period) of the Customs Act, 1962, any refund claim was required to be made within 6 month of the date of payment of duty. 18. Learned Authorised Representative submits that the issue is Res Judicata; the Appellant had claimed the benefit of Notification 516/86-Cus dated 30.12.1986, for the impugned Rig in its Appeal filed before CESTAT in the year 2000; CESTAT, vide Final Order dated 02.02.2001 (2001 (135) ELT 625 (T), denied the benefit of Notification 516/86-Cus to the said Rig, as no Certificate as required under the said Notification was procured and observed that conditions of the notification need to be strictly constructed, as held by the Apex Court in Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of import and in that event duty would become payable, at the rate in force on the date of payment of duty as per Section 15 (1) (c) of the Customs Act 1962. He submits that as the Appellants have obtained the Essentiality Certificate, in terms of the liberty granted by the Tribunal s judgment dated 2-2-2001, the question of paying duty under Section 125 (2) does not arise. 20. Learned Counsel submits that the denial of exemption under Notification No.516/86 Cus dated 30-12-1986, by the adjudicating authority and the appellate authority, on two grounds that the Notification expired on 31-12-1988 and that the authority which issued the Essentiality Certificate is different from that specified in Notification No.516/86, is not tenable in law; it is contrary to the decision of the Supreme Court in the case of ONGC Ltd (Supra). Even otherwise, the very fact that the Rig had been imported in connection with offshore oil exploration itself resulted in accrual of a right to exemption in favour of the Appellants and such right would survive even after the expiry of the Notification, in terms of Section 159A of the Customs Act 1962, which provides that where a Notification is amended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atural Gas specified in the said Notification ceased to exist, the Ministry of Petroleum and Natural gas examined the case in consultation with IFD (Integrated Finance Division) who approved the issue of EC on ex-post facto basis by the DGH who is the authority under the Successor Notifications Nos.No.16/2000-Cus dated 1- 3-200 and No.17/2001-Cus dated 1-3-2001; Ministry of Petroleum and Natural Gas has themselves clarified vide their letter dated 26th July 2006 (p.195 of appeal) and that the Ministry has pointed out that such EC had been issued in the past also and there was no irregularity in issuance of such EC on ex-post facto basis. 23. Learned counsel further submits that Reliance placed on the case of CC Vs M. Ambalal Co- 2010 (260) ELT 487 (SC) is misconceived; department cannot say that since in the present case the Rig has been held to be liable to confiscation under Section 111 of the Customs Act 1962, it is not eligible for duty exemption; Firstly, it is not the ground on which the exemption has been denied by the adjudicating authority and the Commissioner (Appeals); it is held in the case of Prince Khadi Woollen Handloom Products Cooperative Industrial S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired for petroleum operations; in the present case the import was in the year 1988 at which time the operations were carried on pursuant to Petroleum Exploration License granted by the Government to ONGC; he submits information downloaded from the website of Ministry to show that prior to 1991, Petroleum Exploration License was granted to ONGC; thus, the original contract/ license is between the Government of India and ONGC and ONGC in turn sub- contracted to the Appellants; in respect of the import in question, the Director General of Hydrocarbons has issued the necessary certificated certifying that the said rig was required for petroleum operations; the Appellants are therefore, in any event, entitled to the exemption under Notification No.17/2001- Cus even if it is held that the Appellants are not entitled to exemption under Notification No.516/86; it is held by the Hon ble Supreme Court in Share Medical Care v UOI- 2007 (209) ELT 321 (SC) that an alternative claim for exemption notification can be made at a later stage even if not claimed earlier. He submits that Revenue s reliance on principle of res judicata stating that the claim was not made before; firstly, this is not th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration by us in the instant case is as to whether the Rig trident (ii) imported in April 1988 would be eligible for the benefit of Notification No. 516/86 dated 30.12.1986 on the strength of the essentiality certificate issued on 21.12.2011 much after the validity of the notification. 27. Learned Counsel for the appellants submit that denial of exemption under the notification cited above on the ground that the essentiality certificate dated 21.12.2001 was issued after rescission of the said notification on 31.12.1988 is contrary to the decision of the Hon ble Supreme Court in the case of ONGC Ltd. 2006 (201)ELT 321 (SC); denial of exemption notification on the ground that Director General Hydrocarbons was not the authority specified in the Notification No.516/86 is not tenable under law. The contention of the appellants is mainly that the substantive condition of the notification has been fulfilled to the extent that the imported Rig has been used in connection with the off-shore oil exploration and there is no dispute on this fact. Learned Counsel for the appellants submits that Hon ble Supreme Court has also followed the same principles in the case of CC Vs Tullow In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essentiality certificate was not issued by the prescribed authority is nonest, ab initio void and hence not valid. Learned AR further submits that the claim for refund is hit by limitation and the bar of unjust enrichment. Alternative plea for Notification No.17/2001 is not applicable as the same applies to contracts issued or renewed after 01.04.1999 whereas in the impugned case, the contract expired on 15.02.1994. 29. We find that the appellants have heavily relied upon the cases of ONGC, Tullow India and Jagson International (supra). We find that the factual matrix in these cases and the observations of the Court are as under: (i) In the case of ONGC, we find that the essentiality certificate was applied for before the filing of Bill of Entry. Hon ble Supreme Court observed as follows: 12. The Appellant is a public sector undertaking. The exemption notification inter alia was issued in its favour by the Central Government. It may be true on that on the date when the goods were provisionally cleared the Appellant did not have he essentiality certificate with it, but this Court in its judgment dated 28th October, 2005 [since reported in (2005) 13 SCC 789] categorical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a department of the Central Government. The essentiality certificate admittedly was not granted by the Directorate General of Hydrocarbons within a reasonable time. The importers could not be blamed therefore. It is possible that delay in granting the said essentiality certificate was by of default on the part of the authorities concerned. .. 39. Furthermore, it is also well-settled that the Legislature always intends to avoid hardship. In a situation of this nature, the exemption notification cannot be construed in a way which would prove to be oppressive in nature. However, we do not intend to lay down a law that delay on the part of the authorities in granting such certificates would automatically enable an assessee to obtain refund. Each case has to be judged on its own facts. 30. On going through the above judgments, we find that the facts of the case are not similar. In the above cases, the appellants therein have applied for the essentiality certificate at the time of filing of the Bill of Entry though they were not in the possession of the same at the time of import. It can be seen from the observations of the Hon ble Court even in the very above case t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady found, and executed them as well. But then, it appears, 1st appellants had a change of heart, perhaps because of the fear of enormity of penalty and punishment devolving on them. Operation cover-up i.e. applying for essentiality certificate and for amendment of IGM and filing of Bill of Entry, etc. was initiated. They no doubt, succeeded, by getting the Bill of Entry (Filed later) assessed as duty free in October 1989. But this action cannot have the effect of wiping away the illegality already committed by them. In the face of this factual situation and on the plain terms of the notification, they would not have been entitled to the refund of duty, even if they had been detected on 17/18-4-1998 and made to pay duty on removal of the goods from customs area. Benefit of the notification could not be and cannot be extended to the appellants. 32. We find that Notification No.516/86 grants exemption subject to the following conditions: (i) the importer produces a certificate in each case from an officer not below the rank of Deputy Secretary to the Government of India in the Ministry of Petroleum and Natural Gas to the effect that the goods imported are of a type and kind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ussion above, that unlike in the cases cited by the appellants in their favour, the facts of the impugned case are different. In the instant case, the Bill of Entry was not filed; essentiality certificate was not applied for at the time of import. The impugned Rig was seized and such seizure was held by this Bench and was affirmed by the Apex Court. The Bill of Entry was filed on 02.03.2001 and the Bill of Entry was finally assessed. In the cases cited by the learned counsel for the appellants, the assessments were provisional and the certificates were produced before finalization of the assessment. In that context, the Hon ble Apex Court found that delayed submission of essentiality certificates, for which the applications have already been made by the respective parties, would not take away the right to exemption claimed. Moreover, in the impugned case the appellants neither applied for the essentiality certificate nor were in the possession of the same at the time of import. The impugned rig was seized for various violations and the same was upheld by this bench and affirmed by the Apex Court. The impugned goods herein have the taint of being smuggled. Therefore, the same cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants on this count cannot come to the rescue of the appellants. 36. Learned AR for the Department also submits that the refund by the appellants is barred by limitation, as the Bill of Entry was assessed on 02.03.2001 and refund claim was made on 05.05.2002, under Section 27 of Customs Act, 1962; refund claim is hit by unjust enrichment in view of the Arbitration Petition filed by the appellants before the Apex Court. Appellants however, did not submit anything on this. We find that the issue of Refund is not before us. These arguments, in view of the same, become superfluous and thus, we are not inclined to make any observations on the issue of limitation or unjust enrichment. 37. The appellants have made the alternate claim of exemption under Notification No.17/2001. We find that as submitted by the learned AR, as per Sl. No. 247 read with Condition No.49 of the Notification, the exemption is available if: (a). It applies only to Contracts between GOI or State Govt. with ONGC Ltd. or Oil India Ltd. (b). It applies only to Contracts issued or renewed after 01.04.1999 in this case contract expired on 15.02.1994. (c). Contracts of ONGC are specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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