P. Anjani Kumar, Technical Member.
1. This appeal assails the order-in-Appeal No.565/2007/MCH/AC/VB/07dated 08.07.2007 passed by the Commissioner of Customs (Appeals), Mumbai-I. Brief facts of the case are that the appellants are engaged in the activity of carrying on offshore oil exploration/ exploitation under contract with Oil and Natural Gas Corporation (ONGC).; they imported Rig Trident-II in 1988; the said tug was towed by M.V. Mighty Servant-2 which was indicated in the Import General Manifest filed in respect of M.V. Mighty Servant-2; as there was ambiguity about whether a Bill of entry was required to be filed in respect of the Rig Trident-II, bill of entry was not filed although the fact of the Rig Trident-II having been brought by towing by M.V. Mighty Servant-2 was indicated in the IGM, filed per Mighty Servant-2; Customs department too did not insist on filing of Bill of entry in respect of Rig Trident-II; the said rig was engaged in operations from May 1988 to Jan 1998 under Contract with ONGC; from January 1998 to November 1998under contract with Enron and from December 1998 again under Contract with ONGC. A Show Cause Notice dated 8th July 1999 was issued to the Appellants proposing confiscation of the Rig Trident–II under Section 111 of the Customs Act 1962 mainly on the ground that bill of entry was not filed.
2. Commissioner confiscated the Rig Trident-II under Section 111 while giving option to redeem the same on payment of Redemption of Rs.15 Crores and imposing penalty of Rs.5 Crores. This Tribunal, vide Order dated 27-3-2000, ordered predeposit of Rs.3 Crores and furnishing of Bank of Guarantee of Rs.50 Crores. Tribunal, vide final Order dated 2-2-2001, reduced the fine to Rs.25 Lakhs and penalty to Rs.5 Lakhs. Tribunal, while denying the benefit of exemption, held that it is open to the importer to pursue the claim. Both the Appeals, by the Appellants as well as the department, against the Tribunal’s Order dated 2-2-2001 were admitted by the Supreme Court.
3. The appellants exercised the option of redemption requested that the redemption fine of Rs.25 Lakhs and penalty of Rs.5 Lakhs be adjusted out of the pre-deposit of Rs.3 Crores made as per Tribunal’s stay order. Appellants deposited an amount of Rs.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 Rs.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 the import of Rig Trident-II had been examined in consultation with Finance Division and there was no objection to the issuance of the Essentiality Certificate by authorized Officer in DGH office. Accordingly, to Director General of Hydrocarbons (DGH), issued the Essentiality Certificate vide letter dated 21- 12-2001. Appellants, vide letter dated 28-12-2001, submitted the Essentiality Certificate to the Deputy Commissioner and filed Bill of Entry claiming the exemption from duty and also applied for refund of the duty which was paid in February-March 2001. The said application was rejected by Order dated 4-2-2002, inter alia, on the ground that the matter was pending before Supreme Court. Commissioner (Appeals), vide order dated 1-6-2004, upheld the rejection. Supreme Court, vide order dated 2-11- 2004, rejected both the appeals and as a result Tribunals order dated 2-2-2001, attained finality. Tribunal, vide order dated 15- 7-2005, remanded the matter to the Commissioner (Appeals) to decide the Appellants’ claim for exemption from duty and consequential refund. Bombay High Court disposed off Writ PetitionNo.481 of 2001, vide Order dated 22-3-2006, directing the Assistant Commissioner to examine the Appellants’ claim for exemption based on the Essentiality Certificate and finalize the assessment of the Bill of Entry. In view of the High Court Order, the Commissioner (Appeals) also, vide Order dated 31-5-2006, remanded the matter to the Assistant Commissioner.
5. Director General of Hydro-Carbons, extended the validity of the Essentiality Certificate for a period of one year from 8-8- 2006. Ministry of Petroleum and Natural Gas, vide letter dated 26th July 2006, clarified that since the Empowered Committee under Notification No.516/86 had ceased to exist, the Ministry of Petroleum and natural gas had examined the case in consultation with IFD (Integrated Finance Division) who had approved the issue of EC on ex-post facto basis. It was also 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. Assistant Commissioner, vide order dated 6-10-2006, rejected the Appellants’ claim for exemption based on the Essentiality Certificate dated 21-12-2001 on the ground that the Essentiality Certificate had been issued after the rescission of Notification No.516/86 on 31-12-1988 and further 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 Notification. He submits that the facts of the instant case are comparable to that ONGC case (supra); goods were imported in May-June 1999; Essentiality Certificate, as required for claim of exemption under Notification No.20/99-Cus dated 28-2-1999, was issued on 26-3- 2004, after the said Notification was rescinded on 1-3-2000.
7. Learned Counselfor the appellants submits thatthe Supreme Court nevertheless held that the benefit of the Notification cannot be denied for the delayed production of the Essentiality Certificate; production of Essentiality Certificate should be construed liberally as the eligibility clause was satisfied; in the present case, the customs department itself did not require filing of Bill of Entry payment of duty, when the Rig was imported in 1988, although the IGM of MV Mighty Servant2indicated that it had towed Rig Trident-II; there was ambiguity prevailing even in the customs department has to whether Bill of Entry was required to be filed; Show Cause Notice was issued, 11 years after the import, in July 1999; i.e. and it would be totally unjust to deny the exemption on the ground that Essentiality Certificate was obtained after the rescission of the notification in December 1988. He submits that the Principal Bench of the Tribunal, in the case of Jagson International Ltd. v CC 2006 (199) ELT 553, held that though essentiality certificate, under Notification No. 196/89which was rescinded on 1-3-1997, was issued in May 1999, for the rig imported in April 1993, the production of the essentiality certificate only reflected the purpose for which the rig is imported and since such purpose is not in dispute the exemption cannot be denied.
8. Learned Counselfor the appellants submits also that although Notification No. 516/86 was not in force when the matter was adjudicated and duty was to be paid in 2001, there were successor Notifications No. 16/2000-Cus dated 1-3-2000 and No. 17/2001-Cus dated 1-3-2001 which also provided for similar exemption. Learned Counselsubmits that denial of exemption on the ground that DGH was not the authority specified in notification No.516/86 also not tenable in law; the issue of payment of duty itself was raised by the department after the Notification No. 516/86 1999 got rescinded and the Empowered Committee of the Ministry of Petroleum and Natural Gas as specified in the said Notification ceased 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 appellants have argued that Section 125(2) of the Customs Act, 1962 does not create a fresh liability; the Hon'ble CESTAT had already confirmed the duty demanded, vide final order dated 2.2.2001, holding that the goods were brought into India without a license (as goods were second hand goods more than seven years old); were removed from the Customs Area without filing a Bill of Entry and without intimating Customs authorities or getting their permission; the Rig was confiscable under Section 111 (d), 111(h) & 111() of the CA, 1962; Section 28 has no play in the matter and that the issue would be governed entirely by section 125(2) of the CA, 1962 and the duty payable was in terms of Sec 15 (1)C). The order has since been confirmed by the Hon'ble Supreme Court.
10. The Appellant’s reliance on the case of ONGC Ltd Vs CC 2006(201) ELT 321(SC) is incorrect as the case is factually different from that of the ONGC as the application for essentiality certificate was made, before the filing of the bill of entry, on 5.4.1999; the goods were not smuggled nor prohibited in the case of ONGC; as it was a case of provisional assessment, it was permissible to submit the certificate later before final assessment. The facts of the case of CC Vs Tullow India Operations 2005(189) ELT 410 were similar. In the case of appellants the application for essentiality certificate was not even made at the time of filing of bill of entry. The bill of entry was finally assessed. The benefit of the notification was also not claimed in the bill of entry and the application for essentiality certificate was made much after the final assessment of the bill of entry. Relying on CCE, Calcutta Vs AlNoori Tobacco Products reported in 2004 (170) ELT 135 (SC), he submits that as the facts of this case are entirely different, the same cannot be a precedent. Further, Apex Court in the case of CC (Import), Mumbai Vs Dilip Kumar & Co. reported in 2018 (361) ELT577 (SC) held that notification should be strictly interpreted and the conditions of the notifications should be strictly complied with. In the case of Jindal Drilling and Industries Ltd Vs CC, Bombay 2001 (138) ELT 1335 (Tri-Del) tribunal held that the benefit of exemption notification was not available as the goods were removed without proper permission and that no application for the essentiality certificate was made at the time of removal 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 Court in CC Vs M. Ambalal & Co. 2010 (260) ELT 487 (SC) .
12. Learned Authorised Representative further submits that the issue now is a dispute between the Appellant and ONGC under The Arbitration and Conciliation Act, 1996; there can be no valid claim for re assessment and refund of Customs duty from Revenue; Supreme Court, vide their decision dated 20.04.2006, in Arbitration Petition no. 1 of 2006 decided that ONGC is liable to reimburse the amount of Customs duty to the Appellant. Only the quantification of the liability was to be worked out; hence, as far as the Appellant is concerned, it has decided that the duty is payable without the benefit of Notification No 516/86 Cus. The Appellant cannot be unjustly enriched by claiming the same amount from both Revenue as well as ONGC as held by Apex Court in Sahakari Khand Udyog Mandal Ltd Vs CCE 2005 (181) ELT 328 (SC); any claim for refund of the said amount by the Appellant, if sanctioned should be credited to the Consumer Welfare Fund only.
13. Learned Authorised Representative also submits that the Appellant smuggled the Rig into India on 26.04.1988; they did not file any Bill of Entry; they did not have a license for its import; they moved the rig out of the Customs Area without permission and against the provisions of Sections 32, 33, 34 and 35 of the Customs Act, 1962; the appellants did not offer the rig to assessment under Section 17, 46 and 47 of the Customs Act, 1962 and they did not claim Notification 516/86 Cus and no application Essentiality Certificate was made until 06.06.2001. He submits that the Essentiality Certificate submitted has been issued by the Deputy General Manager (EC) Directorate General of Hydrocarbons, Ministry of Petroleum and Natural Gas, New Delhi, whereas the Notification 516/86-Cus required that the Certificate be issued by the Member - Secretary of the empowered Committee on the indigenisation of Oil Field Equipment and Services of the Ministry of Petroleum and Natural Gas, Government of India; on the date of issue of EC on 21.12.2001, there was no such Empowered Committee, as seen from the letter dated 26.07.2006 of the Under secretary, of the said ministry; the Directorate General itself not sure their powers to issue such a Certificate as seen from their letter dated 07.03.2006 to the ministry; Under Secretary to the Ministry justified such an action by stating that 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 Council in Nazir Ahmed Vs King Emperor AIR 1936 PC 253
(iii). State of U. Vs Singhara Singh AIR 1963 SC 358 ,
(iv). MeeraSahni Vs Lt. Governor 2008 (9) SCC 177 ,
(v). Babu Varghese Vs Bar Council of Kerala 1999 (3) SCC 422
(vi). Steel Strips Vs CCE 2011 (269) ELT 257 (Tri - LB).
(vii). Centre for Public Interest Litigation Vs UOI 2011 (266) ELT 6 (SC)
14. Learned Authorised Representative also submits that the Appellant filed a Bill of Entry on 20.02.2001 and paid the applicable duty along with Redemption Fine and penalty as ordered by CESTAT while seeking release under Section 125 (2) of the Customs Act, 1962. No claim was made for exemption, in the bill of entry, under Notification 516/86-Cus and on such date, the said Notification did not exist; no Application was made to the Ministry of Petroleum and Natural Gas for issue of any Essentiality Certificate for the said Rig until 06.06.2001; as per paragraph (2) of Notification 516/86-Cus. as amended, the Notification shall be in force up to and inclusive of the 30th day of November 1988; the said Notification is an example of Temporary Legislation because it was time bound and expired on its own terms without any Savings Clause and without any successor; temporary Legislation is not subject to the provisions of Section 6 of the General Clauses Act, 1897 as has been decided in Kumho Petrochemicals Co Ltd Vs UOI 2014 (304) ELT 3 (Del) and UOI vs Kunho Petrochemicals Co. Ltd. 2017 (351) ELT 65 (SC). He submits that the said Notification does not attract the provisions of Section 159A of the Customs Act, 1962, as the same was never repealed or rescinded or superseded by any subsequent notification/ legislation; the Notification expired on 30.11.1988 and did not save any right or privilege not claimed during its life time. He relies upon
(i). District Mining Officer Vs Tata Iron and Steel Co AIR 2001 SC 3134
(ii). Rayala Corporation Vs Director of Enforcement AIR 1970 SC 494 .
(iii). Kolhapur Cane Sugar Works Ltd. UOI 2000 (119) ELT 257 (SC) .
(iv). Justice G.P. Singh’s Principles of Statutory Interpretation 12" Edition Chapter 7 (pages 659 to 671)
He submits that No Branch of the Executive should be allowed to run amok and act contrary to or beyond the power delegated to it by the Legislature. No Branch of the Executive can act in any manner in any area where it has no jurisdiction; 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 Appellant on 2.3.2001; Notification 16/2000-Cus dated 1.3.2000 was rescinded by Notification 21/2001 Cus. Dated 1.3.2001 and hence, was not in force on 2.3.2001;
(iv). Essentiality certificate issued was valid exclusively for Notification 516/86-Cus as amended;
(v). ONGC has been licensed to conduct Petroleum Exploration on nomination Basis during 1988 to 1994 only;
(vi). the appellants had no contract with ONGC or Oil India or the GOI or any State Govt. on 2.3.2001 for the import of Rig Trident II for petroleum exploration operations; as per this Certificate, the Appellant was a contractor of ONGC Ltd and was not a sub-contractor; contract was executed on 2.5.1988 and expired after 4 addendums on 15.2.1994.
(vii). Director General Hydrocarbons vide letter, dated 21.12.2001 to ONGC Ltd, categorically stated that, the Certificate is only for the purpose of Notification 516/86-Cus and was subject to the condition that, neither party should avail of double / dual benefit by virtue of the said Certificate.
16. Learned Authorised Representative submits that the Rig has been classified under CTH 8905.20 and the Notification 17/2001-Cus (Sl. No. 247 read with Condition No. 49 and Sl. No 249 read with Condition No. 51)is also not applicable for the following reasons.
(i). It applies only to Contracts between Government of India or State Government with ONGC Ltd or Oil India Ltd; the Appellant had no existing or past Contract with the Government of India.
(ii). it applies only to Contracts issued or renewed after 1.4.1999; in this case contract expired on 15.2.1994; Contracts of ONGC are specifically covered by serial no. 250; the appellants had only licenses to operate on certain blocks;
(iii). the Appellant, a foreign Company, is neither a Licensee a defined in the Notification nor a 'Sub Contractor'; appellants are contractors of ONGC Ltd and not of the Government of India or any State Government; This condition applicable only for contracts with Government of India not for contract with ONGC.
(iv) None of the conditions of Clause (c) of Condition 49 are satisfied as there is no Affidavit or Undertaking or Certificate of non-release of any foreign Currency/Foreign Exchange remittance towards the import of the Rig, as prescribed.
17. Learned Authorised Representative submits that the eligibility and thus the claim for a conditional 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 Oil Industries Pvt. Ltd. Vs UOI 1995 (77) ELT 289 (SC); the said order of CESTAT has been upheld by the Supreme Court ( 2005 (179) ELT A39 (SC).
Additional written submissions by the Learned Counsel
19. Learned Counselfor the appellants, in reply, to the averments of the Authorised Representative, submits that Section 125 (2) of the Customs Act 1962 does not create a fresh liability to duty; it merely provides that where any fine in lieu of confiscation of goods is imposed, the owner of such goods or the person from whose possession the same are seized, shall in addition be liable to any duty and charges payable in respect of such goods; it provides that the fine in lieu of confiscation will not be a substitute for the duty payable on the goods, but shall be in addition to the duty payable on the goods; if the duty, at the applicable rate, at the time of import, stood discharged, no fresh duty liability is created by Section 125(2); in other words if the goods at the time of import were eligible for duty exemption under a Notification at the time of import, question of paying duty under Section 125 (2) does not arise. He submits that Tribunal held, in the case of Jagson International Ltd Vs CC – 2017(357)ELT1264, that Section 125 of Customs Act, neither specifies the authority to determine the duty nor it vests the obligation in a ‘proper officer’; Section 125 of Customs Act, 1962 does not empower determination or assessment; it cannot be resorted except when duty has already been assessed and foregone at the time of import; in the instant case, the rig Trident-II was exempted from duty at the time of import, and therefore, no duty remained to be payable; Tribunal, vide final order (supra) in the first round of litigation, did not reject the Appellants’ claim for exemption under Notification No.516/86- Cus dated 30-12-1986 on the ground that the Appellants cannot claim exemption at the time of redemption of the Rig in 2001; Tribunal rejected the claim on the ground that the Appellants did not have the Essentiality Certificate stipulated in Notification no.516/86 and gave liberty to the Appellants to pursue the claim; in effect it follows that only if the Appellants failed to obtain the Essentiality Certificate and thereby failed to comply with the condition of Notification no.516/86, it would follow that the Rig was not exempted from duty at the time 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, repealed, superseded or rescinded, the rights and liabilities which accrued under such Notification would survive even after such amendment, repeal, supersession or rescission. This view was upheld by tribunal in Samay Electronics (P) Ltd v CCE – 2015 (328) ELT 238 and in Tonira Pharma Ltd v CCE – 2007 (208) ELT 38 further by Supreme Court in Shree Bhagwati Steel Rolling Mills v CCE – 2015 (326) ELT 209.
21. The reliance placed by the authorized representative for the department on the decision in Kumho Petrochemicals Co Ltd Vs Union of India 2014 (306) ELT 3 (Del) is totally misconceived since that decision was not concerned with rights and liabilities which arose in respect of imports before the expiry of the Notification but dealt with extension of the anti-dumping duty for the period after the expiry of the Notification in respect of imports made after the expiry of the Notification. In fact, Apex Court observed that “A temporary Statute even in the absence of a saving provision like Section 6 of the General Clauses Act may not be construed dead for all purposes and the effect of expiry is essentially one of the constructions of ”. He submits that even the “Principles of Statutory interpretation” by G.P. Singh relied upon by the authorized representative of the department, clearly states that expiry of a temporary statute does not make it dead for all purposes and enduring rights and obligations under the same would survive its expiry; in the present case upon the import of the Rig for purpose of oil exploration at a time, Notification no.516/86 which was in force, created an enduring right to exemption from duty on the said Rig which would survive the expiry of the Notification.
22. Learned Counsel for the appellants further submits that denial of exemption on the ground that DGH was not the authority specified in notification no.516/86 also not tenable in law; as the eligibility clause about the import of goods in connection with off-shore oil exploration/ exploitation which is to be strictly construed stands satisfied, the condition of the production of Essentiality Certificate must be liberally construed; in the facts of the present case, since the issue of payment of duty itself was raised by the department after 1999 by which time Notification No. 516/86 stood rescinded and the Empowered Committed of the Ministry of Petroleum and Natural 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 Society Vs CCE – 1996 (88) ELT 637 (SC) that at the appellate stage before the Tribunal, the benefit of exemption Notification cannot be denied on a new ground which was not originally contended by Revenue; Secondly, M. Ambalal & Co case relates to town seizure of Diamonds in respect of which the person from whom the diamonds were seized could not offer any satisfactory explanation nor produce any documents in relation to their licit import; in these facts, the Hon’ble Supreme Court held that it cannot be said that the conditions of the exemption notification were satisfied and therefore the exemption was denied; in fact Supreme Court held in the same judgement (at Para 10) that a beneficial exemptions having their purpose as encouragement or promotion of certain activities should be liberally interpreted. Learned Counsel submits that the present case was not one of clandestine import of the Rig; on the contrary the Rig was duly manifested in the Import manifest of the vessel which towed and brought the rig into India and even the customs permitted the rig to go for offshore oil exploration activities without requiring the filing of the Bill of Entry; that apart, the Ministry of Petroleum has issued the Essentiality Certificate certifying that the rig has been imported for the purpose of offshore oil exploration and it therefore follows that the requirements of the exemption Notification are fully satisfied; beneficial exemptions issued in national interest to promote oil exploration projects of national importance, for which the Rig has been imported, must be construed liberally; unlike in the case of M. Ambalal & Cocustoms has subsequently permitted filing of Bill of Entry and the Bill of Entry has been filed and assessed.
24. Learned counsel further submits without prejudice that as an alternative, exemption under Notification No.17/2001-Cus dated 1-3-2001, is available; Sr.No.249 of the said notification grants exemption to Goods specified in List 19 required in connection with petroleum operations subject to condition No.51.; Sr.No.2 of List 19 of the condition No.51, covers all rigs if imported either by a contractor under contract with Government of India or a sub-contractor of the contractor in connection with petroleum operations, a Certificate from the Director General of Hydrocarbons was required to the effect that the imported goods are required 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 subcontracted 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 the ground on which the adjudicating authority and the Commissioner (Appeals) has denied the exemption; as held by Apex Court in Prince Khadi Woollen Handloom Products Cooperative Industrial Society (supra), benefit of exemption Notification cannot be denied on a new ground, at the appellate stage before the Tribunal, which was not originally contended by Revenue; secondly, Supreme Court held in ITC v CCE – 2004 (171) ELT 433 (SC),that the foundation of the plea of res judicata must be laid in the pleadings and cannot be raised for the first time at the stage of the appeal and thirdly, the Tribunal, in the final order dated 2-2-2001, granted leave to the Appellants to pursue the claim for exemption after obtaining the Essentiality certificate.
25. On the claim of the revenue that as per letter, dated 5-4- 1988, from the Government of India to ONGC, conveying sanction of foreign exchange for charter hire of rig from the Appellants, condition 51 of Notification no. 17/2001-Cus was not satisfied, learned Counsel submits that sanction of foreign exchange was not for the import of the rig but was for hire charges to be paid during the period of operation of the rig in India; condition No.51 bars remittance of foreign exchange for import of the rig; this condition is satisfied since the Essentiality Certificate clearly states no foreign exchange is remitted for the import of the rig. Replying to the contention by the authorized representative that the exemption should be denied to the Appellants since the same was not claimed in the Bill of Entry filed on 20-2-2011,learned counsel submits that this contention also is not tenable in terms of untenable in law in view of the fact that neither the adjudicating authority nor the first appellate authority denied the exemption on this ground and as such it cannot be denied by Tribunal now as held by Apex Court in Prince Khadi Woollen Handloom Products Cooperative Industrial Society (supra); moreover, the appellants while filing the bill of entry clearly stated, vide letter dated 20-2-2001, that the duty was being paid without prejudice to the Appellants’ rights and contentions; in terms of the liberty granted by the Tribunal, the Appellants reserve their right to claim refund of the duty after obtaining the essentiality certificate.
26. Heard both sides and perused the records of the case. Brief issue that requires 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 India Operations- 2005 (189) ELT 401. Learned Counsel for the appellants also submits that Tribunal has followed the decision in the case of Jagson International Ltd. 2006 (199) ELT 553. Learned Counsel for the appellants also submits that even if it is considered that the exemption under notification No.516/86 is not available, alternatively, exemption under Notification No.17/2001-Cus dated 01.03.2001 is available. Learned Counsel for the appellants also submits that Section 125(2) of the Customs Act, 1962 does not create a fresh liability to duty; in terms of Section 159A of the Customs Act, 1962, the Notification cannot be denied only for the reason that the same is rescinded.
28. On the other hand, learned Authorized Representative for the Department submits that CESTAT had already confirmed the demand of duty vide Order dated 02.02.2001; the said order was confirmed by the Apex Court also. Learned Authorized Representative submits that the cases of ONGC and Tullow India Operations (supra) relied upon by the appellants would not be of any help to the appellants as the facts in those cases are different to the extent that the applications for essentiality certificates were made before filing of the Bills of Entry whereas in the case of the appellants no such application has been made before the Bill of Entry and that actually, the application was made after the Bill of Entry is finally assessed; the appellants did not have license to import the second-hand capital goods. Learned Authorized Representative submits that the impugned Rig is, in fact, smuggled as held by CESTAT 2001(135) ELT 625 (Tri.)and as such the benefit of Notification would not be applicable; Hon’ble High Court of Bombay has endorsed this opinion; further Apex Court in the case of Aban Loyd Chiles OffShore Ltd. 2017 (346) ELT 513 (SC) held, in similar facts of the case, that the Rig is confiscable under Section 111 of Customs Act, 1962. Learned AR submits that Hon’ble Supreme Court in the Arbitration Petition No.01/2006 decided that ONGC is liable to reimburse the amount of Customs duty to the appellant. Learned AR further submits that the Notification No.516/86 is a temporary legislation valid only till 30.11.1988 and no claim of benefit can be made after the date; no vested right accrued to the appellant under the Notification; Notification No. Learned AR further submits that the 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 ] categorically held that in a case of this nature, unless a final order of assessment is passed, production of a delayed essentiality certificate may not come in the way of the importers obtaining the benefit of the exemption notifications.
14…….The factual events as noticed hereinbefore clearly show that the Appellant’s application for grant of essentiality certificate b the Directorate General of Hydrocarbons was not entertained in absence of renewal of the licence. The application was returned only for that purpose. The Appellant filed its application for grant of essentiality certificate within two days from the date of grant of the licence with retrospective effect and then thereafter sent several reminders. The conduct of the Appellant must, therefore, be judged from the factual matrix obtaining therein. We, therefore, are unable to agree with the opinion of the learned Commissioner that the Appellant made any misrepresentation before this Court or that the Directorate General of Hydrocarbons had shown any favour to it. Once it is held that the Ministry of Petroleum had renewed the licence and the Directorate General of Hydrocarbons had issued the essentiality certificate, the conditions precedent for obtaining exemption in terms of the exemption notification stood fully satisfied.
(ii) In the case of Tullow India (supra) Hon’ble Court observed that:
10. However, it is also not in dispute that ONGC had applied for grant of exemption certificate before the Directorate General of Hydrocarbons in the month of April, 1999. The said essentiality certificate, however, could not be produced before the appropriate authority when importation took place as the same had not thence been granted as a result whereof a provisional clearance of the said tapes was made on 6th September, 1999. The appeal there against before the Tribunal came to be dismissed in December, 2003. Essentiality certificate, however, was granted in favour of ONGC on 23.06.2004.
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 that each case has to be judged on its own facts. In the instant case, the impugned goods were imported in 1988 and the goods were seized and such seizure was upheld by this Bench and was affirmed by the Apex Court. The appellants were not in the possession of the essentiality certificate at the time of import or at the time of filing of Bill of Entry; the essentiality certificate was applied and issued at a much later date after the expiry of the Notification and there too by a different authority which was not prescribed under the Notification claimed. Therefore, the facts of the cases referred are different and therefore any reliance placed upon them would not lead to a correct decision. Learned Counsel for the appellants argued that in the case of Jagson International (supra)the Principal Bench held that though essentiality certificate was issued in May, 1999, it was sufficient to cover the Rig imported in April, 1993. We have gone through the case. We find that the facts of the case therein are also different inasmuch as the classification of the Rig was in question along with the issue of essentiality certificate. In that case the impugned goods were not under seizure; though the issue of certificate was delayed, the application and claim of the notification were in time.
31. We find that the facts of the case before us are comparable to the case of Jindal Drilling and Indus Ltd. 2001 (138) ELT 1335. The Principal Bench observed in this case as follows:
20. But the factual background in this case is totally different. There was no Bill of Entry filed by the importer before removal of the goods as in all cases of this nature relied upon by the appellants. The goods, (qua dutiable cargo) were removed without permission of the proper officer on 17/18-4-1998 as already found by us. They had not applied for essentiality certificate before removal of the goods. They were fully aware about the terms of the notification. Such a condition was available in predecessor Notification 334/88-Cus. Which was rescinded w.e.f. 1-1-1989. They were desperately trying with the Central Govt. to revive the notification as is apparent from a spate of representations to various authorities annexed with the appeals. They also succeeded in getting the notification 134/89- Cus, issued, yet they did not follow its terms. It is obvious that they had other intentions, as already 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 required for off-shore oil exploration or exploitation and will be used for such purposes; and
(ii) the importer produces a certificate issued by a duly authorised officer of the Directorate General of Technical Development certifying that the goods in respect of which the exemption claimed are such as are not manufactured in India.
We find that in terms of the above Notification, essentiality certificate was required to be issued by an officer not below the rank of Deputy Secretary to the Government of India in the Ministry of Petroleum and Natural Gas. However, in the instant case, the certificate has been issued by Deputy General Manager (EC)Director General of Hydrocarbons, Ministry of Petroleum and Natural Gas, New Delhi. From the records of the case, we find that as on the date of issue of the certificate, no empowered committee was in existence. We find force in the argument of the learned Authorized Representative for the Revenue that the Notifications are placed before the Parliament for approval and as such have the same force as that of legislation. If the legislature, which approved the Notification, prescribes that a particular authority is empowered to issue a certificate, the officers of the Ministry have no power to change the same and therefore, the certificate issued by a different authority even though authorized by the same Ministry unless due sanction of the legislature is obtained. We find that no such approval has been obtained. We find that Hon’ble Apex Court in the case of Orient Weaving Mills (P) Ltd. Vs UOI 1978 (2) ELT j311 (SC) and in other cases observed 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”. Therefore, we do not find any merit in the appellant’s claim that the essentiality certificate being issued their eligibility to the exemption notification is established. We also find that Hon’ble Apex Court held in the case of CC, Import Mumbai Vs Dilip Kumar & Company, 2018 (361) ELT 577 (SC) had held that notification should be strictly interpreted and the conditions of the notifications should be strictly complied with. This leaves no doubt whatsoever in our minds that the appellants have not complied with the conditions of the Notification No.516/86 and hence are not eligible to avail the exemption contended.
33. Moreover, we find as per the discussion above, that unlik
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e 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 be treated to be normal imported goods as in the cases relied by the appellants. 34. Learned Counsel for the appellants argues that this Bench has left, the issue of essentiality certificate, open. We find that this Bench vide Final Order No.303-309/2001 dated 02.02.2001 has observed that: 47. It is settled law that terms of the exemption have to be strictly complied with (See Bombay Oil Industries Vs UOI- 1995 (77) ELT 32 ). It is not possible to proceed to accept the eligibility of the notification on the assumption that these two certificates would have been issued. While denying the benefit of the exemption, we leave it open to the importer to pursue this claim, if it is so advised. 35. Though the Bench appears to have kept the pursuit of essentiality certificate by the appellants open, it has been categorically held that one of the conditions is incapable of being fulfilled. This Bench observed that 45. The contention that the rig in question could be imported under the provisions of OGL No. 8 of 88, is not acceptable. One of the conditions of this OGL is that the import is made in pursuance of the service contract awarded to a foreign contractor, the ONGC, Oil India, or Gas Authority of India Ltd. undertakes, that such equipment shall be re-exported after completion of the work. No such undertakings having been furnished by ONGC, this condition is not satisfied. Further, the rig, in any case, has not been re-exported after completion of the contract with ONGC. This condition is therefore incapable of being fulfilled. 36. Ongoing through the above order, it appears that the Bench’s observation that the importers may pursue the certificate, if so advised, it was also categorically mentioned that one of the conditions is incapable of being met. It can be further seen that this Bench has not conferred any right to the appellant and have not also stated that the essentiality certificate needs to be accepted even though it is not issued by the authority designated in terms of the impugned Notification and even after the Bill of Entry is finally assessed. Therefore, we find that the freedom given by this Bench is to be understood in the backdrop of the general tenor of the order and it has to be to be limited subject to the fulfilment of the conditions of the notification. Therefore, we are of the considered opinion that the argument of the appellants on this count cannot come to the rescue of the appellants. 37. 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. 38. 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 specifically covered by serial no.250. 39. We find 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, we do not find merit in the alternate claim also. We further find that learned AR for the Department has submitted various arguments based on the contracts with ONGC and others; on the release of foreign exchange etc and similarly, learned counsel for the appellants has also submitted on various submissions in the matter. We find that those arguments are not of much relevance as we find that the claim of the appellant is otherwise not maintainable for the reasons discussed above. 40. In view of the above, we are of the considered opinion that the appeal is devoid of any merit and is liable to be set aside. Accordingly, we dismiss the appeal and uphold the impugned order.