ORDER
S.S. Kang, Member (J)
1. The appellants filed this appeal against the adjudication order passed by the Commissioner of Customs.
2. The brief facts of the case are that the appellants made import of 11 segments of line pipes as per requirement of ONGC project. The line pipes were required to be installed for water injection to agument oil production. All the line pipes except one segment were for installation at Bombay High platform and are used for connecting two designated platforms and in this process the middle portion of line pipes passes through non-designated area.
3. On 9.3.2000, the Commissioner of Customs (Export) permitted the appellants to file Bill of Entry for 10,387.50 metres of line pipes for designated areas for clearance on payment of duty and allowed the transhipment of the remaining line pipes to be laid in non-designated areas without payment of duty but against execution of bond, thereafter customs authorities demanded duty in respect of quantity of line pipes. The appellants paid duty under protest and got cleared the goods. The adjudicating authority ordered confiscation of the goods on the ground of misdeclaration and imposed penalty of Rs. 3 crores and also confirmed the demand of duty on the entire quantity of line pipes which are used from one designated area to another designated area.
4. Heard both the sides.
5. The contention of the appellants is that out of 11 segments, there is no demand in respect of one segment of line pipes which are being used in the non-designated areas and the provisions of Customs Act, 1962 and Customs Tariff are not applicable to non-designated area.
6. The contention of the appellants is also that the demand is confirmed on the ground that the quantity of line pipes used in the non-designated areas is not quantifiable. The submission of the appellants is that the line pipes are of specific length and total value of each line pipes is separately mentioned. Therefore, the value of line pipes in metres can be quantified. The submission of the appellants is also that the Vedesh Sanchar Nigam Limited is regularly importing cables including fibre optic cables to connect the line of communication and the customs have continuously proceeded on footing that only that part of the cable which is within the territorial waters of India are liable to customs duty. In these circumstances, the submissions of the appellants is that the part of the line pipes used in non-designated areas is not liable to customs duty.
7. Regarding suppression, the contention of the appellants is that they asked for permission from the Commissioner of Customs for clearance of specified quantity of line pipes without payment of duty and this permission was granted subject to fulfilment of bond. Therefore, no suppression can be alleged against the appellants.
8. The contention of the Revenue is that these are customs made line pipes and they cannot be portioned for levy of customs duty as they are starting from the designated area and they are connecting one designated areas to another designated areas.
9. We find that the Central Government is competent to declare any area in the Continental Shelf and Exclusive Economic Zone by virtue of power conferred under by Clause (a) of Sub-section (6), Clause (a) of Sub-section (7) of Section 7 of the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 and the Central Government authorised to extend the Customs Act/1962 and Customs Tariff, 1975 to the designated area. Accordingly, Government of India by Notifications No. S.O.429(E), dated 18.7.86 and S.O.643(E), dated 19,6.96 declared certain installations, structures and platforms and area extending upto 500 metres from the said installations in the Exclusive Economic Zone as the designated area. The Customs Act, 1962 and Customs Tariff Act were extended to the designated area vide Notifications No. 11/87-Cus dated 14.1.87 and 64/97-Cus(NT) dated 1.12.97. In view of these Notifications, the designated area are, therefore, territory of India to which the Customs Act, 1962 and Customs Tariff Act, 1975 have full application.
10. Coming to the facts of the present case, the appellants made import of 11 segments in respect of line pipes. One segment out of these 11 segments is to be used in the non-designated area to which the Customs Act and Customs Tariff Act is not applicable. The Customs Authorities are not demanding duty in respect this segment of the line pipes. The remaining 10 segments of line pipes are used for connecting one designated area to another designated area and the middle portion of the line pipes is always passing through the non-designated area and 2/3rd length of each line pipes will remain in the non-designated area. The appellants produced the evidence before the Customs Authorities by way of drawing approved by the ONGC to show that out of 30,127 metres line pipes, only 10,387 metres line pipes and accessories valued at 2,148,054.71 are liable for customs duty since only these line pipes are required to be installed in the ignated area. Balance quantity of 19739.50 metres of line pipes is required to be installed in the non-designated area. The Commissioner’s Order whereby no duty was demanded in respect of line pipes used in non-designated area is not challenged by the Revenue meaning thereby the order is accepted in respect to the extent of line pipes which is used in the non-designated area is not liable for customs duty. The same analogy will apply to the remaining line pipes. Therefore, we find merits in the argument of the appellants that they are liable to duty only in respect of line pipes which are used in the designated area and not for length of line pipes which are used in the non-designated area. The impugned order is set aside and the appeal is allowed.