Full Judgment Text
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CASE NO.:
Appeal (civil) 1882 of 2004
PETITIONER:
M/s. O.N.G.C. Ltd
RESPONDENT:
Commnr. Of Customs, Mumbai
DATE OF JUDGMENT: 24/08/2006
BENCH:
S.B. Sinha & Dalveer Bhandari
JUDGMENT:
J U D G M E N T
WITH
CIVIL APPEAL NO. 854 OF 2005
S.B. SINHA, J :
The Appellant before us is an undertaking wholly owned and
controlled by the Central Government. It obtained the services of M/s.
SEDCO Forex Int. Drilling Inc. for exploitation of oil and gas on shore
and off shore. A contract was awarded by it to a company known as M/s.
SEDCO Forex Int. Drilling Inc specializing in finding out the possibility
of oil or gas by carrying out seismic surveys. The information gathered
by reason of such survey was recorded in 3-D Seismic Tapes.
A question arose as to whether the same would attract the
exemptions from payment of custom duty in terms of the entries
contained in Sl. Nos. 182, 184 and 231 of the notification dated
28.2.1999.
For the aforementioned purpose, indisputably, an essentiality
certificate was required to be issued by the Directorate General of
Hydrocarbons. Pre-requisites for grant of such certificate also was a valid
Petroleum Exploration licence.
The licence granted by the Central Government in favour of the
Appellant in that behalf was initially valid upto 14.11.1997. The
Appellant applied for renewal thereof on 7.10.1997. An application for
grant of Essentiality Certificate was filed on 5.4.1999. The same was
returned to the Appellant on 12.04.1999. By an order dated 18.08.2000,
the said licence was renewed with retrospective effect from 14.11.1997
by the Central Government. Immediately, thereafter i.e. on 20th August,
2000, the Appellant filed an application for grant of essentiality
certificate in continuation of its earlier application dated 5.04.1999. It
also sent reminders therefor on 26.03.2001, 13.04.2001, 27.12.2001 and
8.07.2003. The Appellant was asked to resubmit the application in a new
format which requirement was also complied with by it on 25.03.2004.
In the said application also, the Appellant categorically stated that the
same was in continuation of its earlier application dated 5.04.1999
whereafter the essentiality certificate was granted on 26.03.2004.
Admittedly, the said 3-D Seismic Tapes were treated to be the
’goods’ within the meaning of the provisions of the Customs Act, 1962.
The said goods were cleared provisionally but in view the fact that the
Appellant had failed to produce the essentiality certificate, a notice to
show cause was issued as to why the said data tapes should not be
classified under CTH8524.99 and charged to duty on the basis of the
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amount paid by the Appellant to the said SEDCO.
The matter ultimately came up before the Customs, Excise and
Service Tax Appellate Tribunal which was heard along with a similar
case of Tullow India Operations Ltd. (Tullow). Whereas Tullow could
produce the essentiality certificate before the Tribunal, the Appellant
could not.
The matter came up before this Court at the instance of the
Appellant. It filed an application for urging additional grounds inter alia
relying on or on the basis of the said Essentiality Certificate granted in its
favour on 26.3.2004. This Court, opining that grant of essentiality
certificate should be treated to be a proof of the fact that the Appellants
had fulfilled the conditions enabling them to obtain the benefits under the
aforementioned exemption notification, remitted the matter to the
Commissioner for consideration thereof afresh having regard to the
similar directions issued by the Tribunal in the case of Tullow.
Pursuant to or in furtherance of the said directions, the
Commissioner has passed an order dated 28.2.2006 holding:
"I hold that the EC dated 26.3.2004 cannot be
accepted and accordingly exemption under serial
number 182 of notification no. 20/99-Cus dated
28.2.1999 (since rescinded), is not available on the
data tapes imported by M/s ONGC vide Bills of
Entry Nos. 9888 dt. 22.6.99 and No. 12443 dt.
28.5.99.
I, therefore, confirm the duty demand of Rs.
49,68,70,160 on M/s ONGC. Since an amount of
Rs. 25,00,00,000/- had already been paid by M/s
ONGC towards the principal amount on 14.9.2004,
the balance amount of Rs. 24,68,70,160/- is now
payable by them.
M/s ONGC are also liable to pay interest under
section 28AB of the Customs Act, 1962, which
comes to Rs. 25.06 crores as on 31.3.2006 after
taking into account interest amounts already paid/
adjusted as indicated in the Annexure to this
order."
The learned Commissioner in forming the aforementioned opinion
proceeded on the basis that the Directorate General of Hydrocarbons
cannot be faulted for not disposing of the Appellant’s application for
grant of the Essentiality Certificate within a reasonable time as the
application therefor had been returned. It further proceeded on the basis
that the Appellant is guilty of concealment of certain facts, viz., return of
the said application in absence of a valid petroleum exploration licence
granted in its favour by the Central Government.
The learned Commissioner further attributed malice on the part of
the Directorate General of Hydrocarbons stating that such essentiality
certificate was granted in order to facilitate the Appellant’s case before
this Court observing:
"In the above background, the EC dated
26.03.2004 cannot be accepted because,
(i) ONGC were not eligible for the EC on
the date of import of the data tapes;
(ii) No application for the EC was pending
with the DGHC on the date of import of
the data tapes (in fact, the application had
been rejected)
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(iii) The EC dt. 26.3.2004 was a solicited
document, solicited for the sole purpose
of winning the case before the Supreme
Court.
(iv) They had not raised this issue before the
CESTAT which is the final authority for
going into facts of the case, and
(v) ONGC have not approached the Hon’ble
Apex Court with clean hands by not
disclosing the full facts.
Another important point to note is that when the
imports took place in the year 1999 the duty
exemption could have been availed by M/s ONGC
on the strength of an EC as per the conditions of
notification No. 20/99-Cus dt 28.2.1999 (Sr no.
182). However, on the date of the present EC was
issued, i.e. 26.3.2004, the notification was no
longer in existence and had already been rescinded
on 1.3.2000 by notification no. 22/2000-Cus dated
1.3.2000. A certificate issued under a rescinded
notification can have no legal sanctity. When the
relevant notification itself does not exist how can a
certificate issued under the authority of the said
notification have any legal validity? Action taken
under a rescinded notification can be saved under a
saving clause of appropriate legislation; but fresh
action cannot be initiated or revived under a
rescinded notification. (In the case of Tullow
India, which was also a subject matter before the
Apex Court in CA No. 5900 of 2004, the
certificate was produced by them within the
validity period of the Customs notification, though
whether the certificate produced by Tullow India
was proper/ genuine/ valid/ applicable or not is a
subject matter of separate proceedings)."
It further opined that another reason why the Appellant disentitled
itself from grant of the benefit of the said exemption notification was that
production of the essentiality certificate was necessary at the time of
importation and not thereafter.
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 that on the date when the goods were provisionally cleared
the Appellant did not have the 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.
The Commissioner in passing the impugned order failed to notice
the findings of this Court. It posed unto itself wrong questions. It did not
address itself the issues required to be gone into.
It may be true that grant of the essentiality certificate was itself
dependent upon the question as to whether the Appellant was possessed
of a valid oil exploration licence or not. It is, however, equally true that
right to renewal of a licence is a valuable right. [See D. Nataraja
Mudaliar v. The State Transport Authority, Madras, AIR 1979 SC 114]
The Appellant applied for grant of renewal of the said licence before its
expiry. The said renewal has been granted with a retrospective effect. In
law, thus, the Appellant had been holding a valid licence continuously.
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The factual events as noticed hereinbefore clearly show that the
Appellant’s application for grant of essentiality certificate by 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.
This Court, times without number, has construed such exemption
notifications in liberal manner. [See Commissioner of Customs
(Imports), Mumbai v. Tullow India Operations Ltd., (2005) 13 SCC 789,
[See Tata Iron & Steel Co. Ltd. v. State of Jharkhand and Others, (2005)
4 SCC 272, Government of India and Ors. v. Indian Tobacco Association,
(2005) 7 SCC 396, Commnr. Of Central Excise, Raipur v. Hira Cement,
JT 2006 (2) SC 369. and P.R. Prabhakar v. Commnr. Of Income Tax,
Coimbatore, 2006 (7) SCALE 191] If, thus, the Appellant was entitled to
the same, it should not be denied the benefits thereof. It is directed
accordingly.
We, therefore, do not agree with the findings of the learned
Commissioner.
In view of our findings aforementioned, we do not think it
necessary to advert to the other contentions raised by the Appellant.
For the reasons aforementioned, the impugned order cannot be
sustained which is set aside accordingly. The appeals are allowed. No
costs.