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Bharat Petroleum Corporation Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided On
Reported in(1984)(18)ELT124Tri(Mum.)bai
AppellantBharat Petroleum Corporation
RespondentCollector of Central Excise
Excerpt:
.....is sufficient force in their arguments, the question which arises before us is to find out what a vessel on foreign run is as contemplated under notification no. 232/67, dated 9-10-1967. a foreign run would imply that the vessel has either come from a foreign port or is bound for a foreign port. the vessel just going out beyond the territorial waters of india cannot be treated as a vessel on the foreign run. the lajpatrai, therefore, did not proceed to a foreign port or to a place outside india when it went to meet the lokmanya tilak for the purpose of lighterage. the point in the sea where the lokmanya tilak was incorporated is not a place as the same is not definable. hence, even in the understanding of a common man, it cannot be argued that the lajpatrai was on a foreign run as.....
Judgment:
1.This application under Section 35-G of the Central Excises and Salt Act, 1944 (to be hereinafter referred to as 'the Act') is by M/s.

Bharat Petroleum Corporation Ltd. (to be hereinafter referred to as 'the Corporation') who are the appellants in E.D. (BOM) Appeal No. 21 of 1983 which was disposed of by this Bench consisting of Member (Technical) Shri K.S. Dilipsinhji and Member (Judicial) Shri Harish Chander on 8th July, 1983. By this application the appellants require the Tribunal to draw up a statement of the ease and refer to the High Court of Bombay the questions of law set out in paragraph 8(d) of their application. These questions according to the appellants arise out of the order-in-appeal No. E.D. (BOM) 21 of 1983.

2. The Corporation have a Marine Oil Terminal at Butcher Island from where bunkers are supplied to both coastal and international vessels.

Under AR-4 No. 30 dated 25th October, 1978 the Corporation had supplied under a Shipping Bill 520.208 Kls. Wat 15.C Furnace Oil falling under Tariff Item 10 of the First Schedule appended to the Act as bunkers to s.s. Lajpatrai which was scheduled to proceed from Bombay to Khora-Al-Amaya in Iran. On the basis of the declaration made by the applicants the ship stores were allowed to be cleared without payment of duty in terms of the Notification No. 11-CE, dated 5th April, 1949 as amended from time to time. By their letter No. MOT/3-EC, dated 15th November 1978 the applicants declared to the Central Excise Authorities that the vessel, after lifting the bonded bunkers was diverted to 'high seas' for lighterage operations. The Superintendent of Central Excise demanded duty on the entire quantity at the rate of Rs. 121.05 (basic duty) and 5% special excise duty thereon. The total excise duty payable on the Furnace Oil bunkers supplied to s.s. Lajpatrai worked out to Rs. 66,119.74. The Corporation paid the duty demanded under protest on 22nd November, 1978. By their application dated 9-3-1979 they claimed refund of duty so paid contending that the vessel Lajpatrai should be treated as foreign going vessel for the purposes of assessment of duty and therefore, the supplies of bunkers were fully exempt. The Assistant Collector adjudged the claim holding that the Furnace Oil bunkers were not eligible for exemption in terms of Notification relied upon by the applicants, and accordingly the claim was rejected. On appeal the Collector (Appeals) confirmed the order of rejection holding that the vessel continued to be within the Indian maritime zone of the country.

In the opinion of the Collector (Appeals) the vessel must touch the port within the territory of another country before it could be called as a 'foreign run' or a 'foreign going port'.

3. Feeling aggrieved by the rejection of their appeal by the Collector (Appeals) the applicants preferred the appeal E.D. (BOM) No. 21 of 1983 before this Bench. It appears that the appellants contended before the Bench which heard the appeal that the Act did not define a 'foreign going port', and therefore, it has to be interpreted as understood by a common person. The Corporation appeared to have further contended that the vessel 'Lajpatrai' was an ocean going vessel and it went out to the sea at a distance of 12 nautical miles for the purpose of lighterage work. Thus, she had gone to a place outside India as the mother ship 'Lokmanya Tilak' from which the Crude Oil was off loaded into the Lajpatrai had been anchored about 20 miles outside Bombay harbour. The Corporation appeared to have relied upon the Calcutta High Court in the case of Turnor Morrison and Company Ltd., 1976 T.L.R. 2108. The then Members of the Bench did not accept the contention of the Corporation.

In paragraph 4 of their order after referring to the contentions urged on behalf of the Corporation, the Bench observed 'while there is sufficient force in their arguments, the question which arises before us is to find out what a vessel on foreign run is as contemplated under Notification No. 232/67, dated 9-10-1967. A foreign run would imply that the vessel has either come from a foreign port or is bound for a foreign port. The vessel just going out beyond the territorial waters of India cannot be treated as a vessel on the foreign run. The Lajpatrai, therefore, did not proceed to a foreign port or to a place outside India when it went to meet the Lokmanya Tilak for the purpose of lighterage. The point in the sea where the Lokmanya Tilak was incorporated is not a place as the same is not definable. Hence, even in the understanding of a common man, it cannot be argued that the Lajpatrai was on a foreign run as envisaged in Notification No. 232/67, dated 9-10-1967. Further plea which has been taken by the appellant, is that the Lajpatrai went beyond the territorial waters of the country.

This also does not help the appellant as in that case too, the vessel cannot be said to be on the foreign run. Besides, the definition of Indian Custom waters under Section 2(28) of the Customs Act includes waters extending to the limit as defined in the Continental Shelf, Exclusively Economic Zone and other Maritime Zones Act, 1976. As per the appellants' own admission, the Lokmanya Tilak was within this limit. Hence the Lajpatrai cannot be said as an ocean going vessel on foreign run and is not eligible to the benefit of the bunkers at concessional rates as claimed by the appellants.

4. The questions of law which the appellants herein requires the Tribunal to refer to the High Court are : 1. Whether on the facts and in the circumstances of the case and on a true and proper interpretation of Notification Nos. 11-CE, dated 5-4-1949 and 232/67-CE, dated 9-10-1967 as amended from time to time, the Tribunal was justified in law in holding that the bunkers supplied to the vessel 'Lajpatrai', an ocean going vessel, were not entitled to the benefit of exemption from basic and additional excise duties under the said Notifications 2. Whether on the facts and in the circumstances of the case, the bunkers supply to the vessel 'Lajpatrai' which was engaged in the lighterage operations beyond 12 nautical miles i.e. beyond the Indian territorial waters, was entitled to the (rebate) and exemption under Notification Nos. 11-CE of 5-4-1949 and 232/67, dated 9-10-1967 3. Whether on a true and proper interpretation of Notification No. 232/67, dated 9-10-1967, the Tribunal was justified in holding that the expression 'foreign run' appearing in the said Notification excludes the vessel going out beyond the territorial waters of India for the purpose of lighterage operations and therefore bunkers supplied to such vessels were not eligible for exemption from (additional) duty 5. During the hearing of the Reference Application, Shri Hidayatulla, learned Advocate for the applicants desired the addition of the words 'rebate' and in the last but one line of question No. 2 after the words 'entitled to the' and before the word 'exemption'. Further, in question No. 3 Shri Hidayatulla desired for adding the word 'additional' in the last line of that question after the words 'exemption from' and before the word 'duty'.

6. At the hearing of the Reference Application the Bench pointed out to Shri Hidayatulla that under Section 35-G reference cannot be made if an order from which the questions of law arise relate among other things to the determination of any question having relation to the rate of duty of excise or to the value of the goods for the purpose of assessment, and that since the Appeal No. 21 of 1983 involved a question having a relation to the rate of duty no reference was permissible. It was pointed out to Shri Hidayatulla that the interpretation of the exemption Notification would lead to the determination of the rate of duty payable by the appellants, namely whether it was at the Tariff rate or at the concessional rate. Shri Hidayatulla contended at the stage of reference application the Bench cannot go into the question as to whether the Bench which heard the appeal had jurisdiction or not to decide the appeal and when once the Tribunal had issued an order under Section 35-C it necessarily means that the order does not relate to any question having relation to the rate of duty of excise. He further contended that the appeal did not involve a question having a relation to the rate of duty and the question before the Tribunal was whether the appellants were entitled for rebate of duty and the Notification was also issued under Rule 12 of the Central Excises Rules (to be hereinafter referred to as 'the Rules') and therefore, the question set out in the application may be referred. He, however, submitted that it is open to the Tribunal to frame a question as to whether on the facts and in the circumstances of the case, a reference is permissible in case the Tribunal comes to the conclusion that the appeal involved a question having a relation to the rate of duty. Shri Hidayatulla also contended that the interpretation of exemption Notification does not mean that the appeal involves a question having relation to the rate of duty. He urged that a question as to the rate of duty arises only when the matter involves classification and not otherwise. Shri Hidayatulla however conceded that if the Bench comes to the conclusion that the questions of law set out in the application do not arise then it is open to the Bench to refuse to refer the question to the High Court. Shri Hidayatulla contended that the appeal involved interpretation of the two Notifications issued under the Act and that the Bench which heard the appeal did interpret the notifications, and therefore, the questions set out in the application are questions of law and the Tribunal cannot refuse to refer them to the High Court. For reasons known to Shri Hidayatulla he also referred to the provisions of Sub-section (3) of Section 35-G of the Act, which conferred a right on the applicant to apply to the High Court if the Tribunal refuses to state the case on the ground that no questions of law arose.

7. We have carefully gone through the order in Appeal No. 21 of 1983, the reference application and also considered the submissions made by Shri Hidayatulla. Though we agree that the points set out in paragraph 8(d) of the application are points of law and they do arise from the order in appeal, we refuse to refer those points of law to the High Court, because the notifications which were interpreted by the Bench consisting of Shri Dilipsinhji and Shri Harish Chander were the subject matter of interpretation by the High Court of Bombay in Writ Petition No. 698 of 1968 and in Writ Appeal Nos. 238, 244, 253 and 254 of 1974.

It is now well settled if the provisions of the Act or Rules or Notifications have been interpreted by the High Court, then the decision of the High Court settles the law. A settled law need not be referred to the High Court.

8. In the appeal the question that was considered as has been set out in the appeal itself 'is to find out what a vessel on foreign run is as contemplated under Notification No. 232/67, dated 9-10-1967'. The Bench had also posed a question as to whether the vessel 'Lajpatrai' was on a foreign run when it left Bombay on 28-10-78 to reach the Lokmanya Tilak for lighterage purpose.

9. In Misc. Petition No. 698 of 1968 His Lordship Justice Lentin at great length considered the meaning to be assigned to the expression 'vessel bound for any foreign port'. In Writ Appeal Nos. 238, 244, 253 and 254 of 1974 His Lordship Justice Rege again construed the expressions 'vessel bound for any foreign port' and 'ocean going vessel on foreign run'. The paragraph 2 of His Lordship judgment reads 'the question involved in this appeal is in narrow compass. The question is as to the meaning to be given to the expression 'vessel bound for any foreign port' and the expression 'ocean going vessel on foreign run' used in the Government Notification dated 5-4-1949 (Ex. A to the petition) under Rule 12 of the Central Excise Rules and a Notification dated 9-10-1967 (Ex. D to the petition) issued under Rule 8(1) of the Central Excise Rules read with Section 3(3) of the Mineral Products (Additional Duties of Excise and Customs) Act, 1958 respectively.

10. When the High Court of Bombay had already interpreted the two expressions and in the absence of any judgment to the contrary by the Supreme Court the question of referring to the High Court for interpretation of the same expressions does not arise. On this ground we refuse to refer the questions set out in the application to the High Court.

11. If the Bench which decided the appeal did not follow the decisions of the High Court of Bombay, the remedy of the applicants is not by way of a reference application. In considering the reference application the Bench does not sit in judgment over the order in appeal No. 21 of 1983. It also has no power to review the orders so passed. The applicants in our opinion have chosen a wrong remedy.

12. After careful consideration of all the aspects and for the reasons stated earlier we refuse to refer the questions set out in the application and reject this Reference Application.


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