Judgment:
1. Both these stay applications and appeals were heard together as it raises common question of law and facts. The question that is required to be considered in both the appeals is as to whether the appellant is entitled to the benefit of concessional rate of Notification No.196/89-Cus., dated 30-6-1989 with regard to the imported item described in the Bill of Entry as Spare Parts for Oil rigs. The appellants in order to seek the concessional rate are required in terms of the Notification to produce Essentiality Certificate from Director-General of Hydro Carbons, Govt. of India, Ministry of Petroleum. When the matter was agitated, the appellants had not produced the Essentiality Certificate and therefore their plea for concessional rate under the said Notification was not accepted. They also pleaded for the benefit under Section 86(2) read with Section 87 for Nil rate clearance for the reason that the item will be utilised in a foreign going vessel. This plea was not accepted by both the authorities and as a result in Appeal E/96/99 (C/St/50/99) a total duty of Rs. 1,16,90,317/- has been confirmed, while in Appeal E/97/99 (E/St/51/99) a total amount of Rs. 11,58,1817- has been confirmed.
2. Arguing for the appellants, ld. Counsel submits that notwithstanding the fact that they have prayed for nil rate of duty in terms of the provisions of Section 87 of the Customs Act, even proceeding on the basis of the claim made under the Notification No. 196/89, the total liability in respect of Appeal C/96/99 would be only Rs. 31,51,914/-.
While in the second appeal C/97/99, the total liability of grant of benefit would be Rs. 4,01,757/-. While they have paid excess, i.e. Rs. 5,65,000/-. They contend that if the excess amount of Rs. 1,65,000/- is adjusted in C/96/99, then the liability would be approximately Rs. 17,12,000/-. He contends that in order to put an end to the controversy, the appellants are willing to pre-deposit this amount within 3 months from the date of receipt of the order. However, their plea is that since they have now produced the entire evidence and Essentiality Certificate issued by the concerned authority under the notification, the matter has now to go back to the original authority for de novo consideration to consider the certificates produced and to grant the benefit. He submits that the Tribunal has already upheld similar contention in the case of S.K.F. Bearings India Ltd. v. CC Bombay 1998 (28) RUT 504 wherein it was held that the belated production of Essentiality Certificate is only a procedural lapse and it cannot take away the substantive benefit which is required to be extended under a Notification. He points out that this judgment has been delivered after taking into consideration 18 judgments noted therein. He further submits that a direction be given to the authorities to first re-consider their plea for nil rate of duty claimed under Section 87 of the Customs Act in the light of the Bombay High Court's judgment rendered in the case of Amer Ship Management Pvt.
Ltd. v. UOI 1996 (86) E.L.T. 15 (Bom.). Only thereafter the authority should consider their plea for concessional rate as claimed under Notification No. 196/89-Cus.
3. Ld. DR Shri Sudarsan opposes the prayer for grant of benefit under Section 87 of the Customs Act for the reason that the rigs do not come within the ambit of definition (Foreign Going Vessel) as appearing in Section 2 (21) of the Customs Act. It is his contention that the authorities have rightly rejected their claim under Section 87 of the Customs Act. As regards the claim of concessional rate and the benefit of Notification 196/99-Cus., he submits that the appellants have not produced all the Essentiality Certificates at the outset and therefore, now they cannot plead that the same is produced at this stage and claim the benefit belatedly. He submits that a report was called for from the concerned authorities about the official status of the appellants. The Assistant Commissioner of Customs (Preventive) by his letter dated 2-1-2001 stated that the company has no establishment at Vizag and therefore recovery would be difficult if stay is granted. He has prayed in the letter for a direction to the appellants to deposit the amounts in full in cash or in the form of bank guarantee in order to secure Revenue interest as the amounts are very heavy.
4. On a careful consideration of the submission, we notice from the records that the appellants have produced the Essentiality Certificates issued by the concerned authorities under the Notification No.196/89-Cus. The benefit was not extended at the original stage for the reason that these certificates had not been produced. Since the same has been now produced, it follows that in terms of the judgment rendered in the case of S.K.F. Bearings Pvt. Ltd. v. C.C.E., Bombay, the matter has to go back to the original authority for re-consideration with regard to the claim of the benefit of Notification referred to. However, the appellants admit that if the benefit of the Notification is extended, still they will be liable to pay Rs. 17,12.000/- in the matter. We have considered the prayer of the appellants to pre-deposit this amount if three months time is granted.
We accept the plea and direct the appellants to pre- deposit Rs. 17,12,000/- (Rupees Seventeen lakhs twelve thousand only) within three months from the date of receipt of this order. The appellants shall produce proof of pre-deposit before the original authority to enable him to take up the matter for de novo consideration about the plea raised by the appellants for the benefit of Notification and for examining the Essentiality Certificates now produced.
5. Appellants' further prayer that there is no duty liability in respect of foreign going vessel as the imported rigs would also fall within the definition of foreign going vessel is required to be re-considered at the first instance for the reason that the Bombay High Court in the case of Amer Ship Management Pvt. Ltd. v. U.O.I. (supra) has considered the oil rigs to be as "vessel" for purposes of Customs Act being floating structures and also as per International Load Line Certificate issued to Oil rigs and other documents of foreign Govt.
produced by the petitioner. This aspect has to be examined only after the appellants have produced necessary evidence to this effect as had been produced by the appellants in the case of Amer Ship Management Pvt. Ltd. Appellants' claim has to be considered only against the evidence that is required to be produced as considered by the Bombay High Court in the light of that judgment. The authorities after recording the findings on the appellants' claim for the benefit of Section 87 of the Act, shall proceed in the case if they come to conclusion that they are not entitled to this benefit to consider the benefit of concessional rate under Notification No. 196/89-Cus.
6. In that view of the matter, the stay applications and appeals are taken up and disposed of by way of remand with a direction that appellants in both the matters together shall pre-deposit Rs. 17,12,000/- (Rupees seven- - teen lakhs twelve thousand only) and produce the proof of their deposit before the original authority. The original authority on verification of the deposits made shall take up the matter for de novo consideration and decide the case after observing the principles of natural justice. The appellants shall proceed with the case in the light of the findings recorded supra.
7. At this stage, both sides seek for a direction to the original authority to decide the matter expeditiously as the Revenue involvement is very high in the matter. The prayer is accepted. The original authority shall expeditiously take up the matter after expiry of three months from the receipt of the order. They shall call upon the appellants to produce proof of pre- deposit and grant them a hearing and decide the matter.