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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(1983)LC1914DTri(Mum.)bai
AppellantBharat Petroleum Corporation
RespondentCollector of Central Excise
Excerpt:
.....excises and salt act, 1944 did not define a foreign going vessel. therefore, for the purpose of excise notification this phrase has to be interpreted as understood by a common person. the "foreign going vessel" had been defined in section 2(21) of the customs act and this definition also cover vessels, engaged in fishing or other operations outside the territorial waters of india or any vessels proceeding to a place outside india for any purpose whatsoever. in the present case, the lajpattrai was on ocean-going vessel and it was supplied with furnace oil classified under item no. 10 of the central excise tariff under a.r. 4 no. 30, dated 25.10.1978 and under shipping bill dated 23.10.1978. the shipping bill indicated in the remarks column that the lajpatrai was bound for.....
Judgment:
1. This is an appeal under Section 35-B of the Central Excises & Salt Act, 1944 filed by M/s. Bharat Petroleum Corporation Ltd. against the orders of the Assistant Collector of Central Excise, Division 'M' Bombay's Order No. V(10)18-3/79, dated 6.2.1980 and Order No.A-1630/B-H-182/82, dated 26.10.1982 of the Collector of Central Excise (Appeals) under which the appellants' claim for refund of duty amounting to Rs. 66,119.74 under Notification No. 232/67, dated 9.10.1967 was rejected. Shri Setalwad for the appellant has argued that Notification No. 232/67, dated 9.10.1967 permits supply of the petroleum products mentioned therein as bunkers to an ocean-going vessel on the foreign run. The phraseology used in this notification is different from that used in Notification No. 11/49, dated 5.4.1949 which stipulates that rebate can be allowed of the duty paid on all excisable goods exported as ships' stores on board the vessel bound for any foreign port. These two phrases came up for interpretation before the Bombay High Court and the High Court had ruled that the two expressions have the same meaning. The learned Advocate argued that in interpreting a notification under the Central Excises and Salt Act, the definitions of words and phrases used in the Customs Act should not be followed. The Central Excises and Salt Act, 1944 did not define a foreign going vessel. Therefore, for the purpose of excise notification this phrase has to be interpreted as understood by a common person. The "foreign going vessel" had been defined in Section 2(21) of the Customs Act and this definition also cover vessels, engaged in fishing or other operations outside the territorial waters of India or any vessels proceeding to a place outside India for any purpose whatsoever. In the present case, the Lajpattrai was on ocean-going vessel and it was supplied with furnace oil classified under item No. 10 of the Central Excise Tariff under A.R. 4 No. 30, dated 25.10.1978 and under Shipping Bill dated 23.10.1978. The Shipping Bill indicated in the remarks column that the Lajpatrai was bound for Khora-Al-Amaya in Iran.

However, the vessel was diverted to high seas for lighterage operations as a bulk carrier which had brought crude petroleum for discharge at Bombay could not come within the Bombay harbour for the reasons of lack of sufficient draft. The appellants informed the Central Excise authorities of this fact in their letter dated 13.11.1978 and the excise authorities thereafter issued a demand for the payment of duty which the appellants paid under protest. The reason for the Assistant Collector to demand duty was the fact that the Lajpatrai was an ocean-going vessel not on foreign run when it proceeded for lighterage work. The learned Advocate argued that this interpretation of the Assistant Collector was not correct. The Lajpatrai was an ocean-going vessel and it went out to sea at a distance of about 20 nautical miles for the purpose of lighterage work. Thus, it had gone to the place outside India as the mother ship Lokmanya Tilak from which the crude oil was offloaded into the Lajpatrai had been anchoring about 20 mites outside Bombay harbour. The Lajpatrai was engaged in lighterage work from 28.10.1978 to 30.10.1978. The Lajpatrai had returned to Bombay on 3.10.1978 and completed unloading on 3.11.1978 after which it again sailed for a foreign port. The learned Advocate contended that this operation implied that the Lajpatrai had gone outside the Indian territorial waters and therefore, the duty on the furnace oil supplied to its bunkers was not chargeable. The learned Advocate referred to the judgment of the Calcutta High Court in the case of Turner Morrison & Co. Ltd. v. The Assistant Collector of Customs, 1976 TLR 2108 in which the learned Calcutta High Court had held that the daughter ship used for lightering foodgrains from mother ship was eligible to the supply of ex-bond stores under the Customs Act. The learned Advocate, further clarified in answer to our query that the customs authorities had appealed to the Supreme Court against the decision of the Honourable Calcutta High Court. The Lajpatrai was bound for a foreign port at the time when bunkers were supplied to it and after lighterage operation it had again sailed to a foreign port. In view of these circumstances, the learned Advocate submitted that the excise duty paid on the bunkers may kindly be refunded to the appellants. As an alternate plea, he submitted that in case the Tribunal did not accept the arguments in the appeal, the benefit of Notification No. 5/66, dated 15.1.1966 should be given to the appellants as under this Notification furnace oil supplied as bunkers to coastal vessels is eligible to partial exemption from duty and this would also provide substantial relief to the appellants.

2. Shri Pattekar for the department has explained that the department permitted the supply of bunkers without payment of full duty as the Shipping Bill indicated that the Lajpatrai was bound for Khora-Al-Amaya of Iran. The appellants also made out the A.R. 4 form application accordingly. On receipt of the appellants' letter dated 15.11.1978 the Assistant Collector of Central Excise became aware of the fact that the Lajpatrai was not a foreign going vessel in terms of Notification No.232/67, dated 9.7.1967 as amended and therefore the demand for the duty on the furnace oil was issued and the amount was recovered. The Lajpatrai left for a foreign port only in 3anuary, 1979. The appellant had merely emphasised the fact that the Lajpatrai was an ocean-going vessel. The capability of the ship was not material but the actual run for the purpose of eligibility of the benefit under Notification No.232/67, dated 9.10.1967. Though the Lokmanya Tilak was anchored outside the territorial waters at a distance of about 20 miles of Bombay harbour, the Lokmanya Tilak cannot be treated as a port or a place and hence when the Lajpatrai left Bombay port to go to Lokmanya Tilak for lighterage work, it could not be said that the Lajpatrai was bound on a foreign run. As regards the judgment of the Calcutta High Court relied on by the appellants, the same was not binding in the present case, especially when the appellants had argued that the definitions of "foreign going vessels" or a "vessel on a foreign run" as understood in the Customs Act were not relevant for the purpose of Central Excise and the rebate claim under Notification No. 232/67-Central Excises, dated 9.10.1976. Only certain provisions of the Customs Act had been made applicable to the Central Excises and Salt Act under Section 12 and the Notification No. 68/63-C.E., dated 4.5.1963 as amended. Since the definition of foreign going vessel under Section 2(21) was not included for application to the Central Excises Act, the appellants' argument that the Lajpatrai fell within the third category of the foreign going vessel under Section 2(21) of the Customs Act was not acceptable. As regards the appellants' claim that they should be given the benefit of Notification No. 5/66, dated 15.1.1966 in case their main appeal was not acceptable to the Tribunal, Shri Pattekar argued that the request for this benefit was hit by the limitation and hence the same was not acceptable. Shri Pattekar, further contended that this plea was not raised by the appellants even in their first appeal to the Collector of Central Excise (Appeals). Hence, both their arguments were not tenable and he prayed that the appeal should be dismissed.

3. The learned Advocate Shri Setalwad has stated in reply that it was the appellants who inter alia in letter dated 15.11.1978 had informed the excise authorities and therefore the bona fides of the appellants were quite clear. They were willing to pay duty applicable in the case and for this reason if the Tribunal held that the appellants were not eligible to the benefit of Notification No. 232/67, dated 9.10.1967 as amended, at least the benefit of Notification No. 5/66, dated 15.1.1966 as amended should be allowed as this benefit was available to coastal vessels.

4. We have examined the submissions on both the sides. We find that the bunkers under Notification No. 232/67, dated 9.10.1967 can be supplied to ocean-going vessels on foreign run. There is no doubt that the Lajpatrai is an ocean-going vessel. However, the point for consideration is whether it was on a foreign run when it left Bombay on 28.10.1978 to reach the Lokmanya Tilak for lighterage purpose. The appellants have argued that the definition of foreign going vessel or foreign run as contained in the Customs Act should not be applied to their case. While there is sufficient force in their arguments, the questions 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 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 Customs 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 described 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. Their plea that Indian waters as defined under Section 2(27) of the Customs Act includes only territorial waters is not helpful to them as this would still not determine the question as to whether the Lajpatrai was a vessel on the foreign run. As regards the judgment of the Hon'ble Calcutta High Court, we find that the same is under the Customs Act and as per the appellants own plea the same is not applicable to their claim under the Central Excises & Salt Act, 1944. This leaves us only with the remaining argument about the appellants' claim to be given the benefit of Notification No. 5/66, dated 15.1.1966. We find that the learned departmental counsel has opposed the extension of this benefit on the ground that this claim is hit by limitation as it has not been made for the first time. We find that this argument is substantially correct. This claim was not before the lower authorities and therefore the same cannot be argued in the appeal which has arisen from the decision of the lower authorities. If any benefit is now to be claimed in accordance with this notification, the proper remedy for the appellants would be to file their claim with the proper officer of the Central Excise who is the Assistant Collector. This claim would not be hopelessly time barred. In this view, it would be not proper for us to entertain it at this stage.

Accordingly, we find that the prayers of the appellants are not tenable at all. We, therefore, confirm the orders of the Assistant Collector of Central Excise (Appeals) and dismiss the appeal.


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