Relief to Larsen and Turbo Limited: CESTAT rules goods Manufactured out of Imported Goods could be Transferred after Completion of Export Obligation [Read Order]

In a major relief to Larsen and Turbo Limited, the Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that the goods manufactured out of imported goods could be transferred after completion of export obligation.

The counsel for the appellant pointed out that they are engaged in providing Integrated Engineering & Construction Solutions to offshore and onshore hydrocarbon projects. He pointed out that they had entered into a contract with M/s. Oil and Natural Gas Corporation Limited (ONGC) for construction of two well-head platforms and sub-sea pipeline at Bassein Oil Field.

For the purpose of laying sub-sea pipeline, the appellant had imported Carbon Steel Seamless Pipes in terms of Notification No. 21/2015-Cus dated 01.04.2015. The said goods were dispatched from M/s. Jindal Saw Limited, who carried out concrete coating process on the imported pipes. The said concrete coated pipes were thereafter sent to site of ONGC for completion of pipe laying by the appellant. After completion of the laying of the pipes, 190 concrete coated pipes were leftover.

The Counsel pointed out that the said pipes were sold to M/s. Bombay Marine Enterprises. Learned Counsel pointed out that the SCN was issued alleging that they had violated ‘Condition X’ of Notification No. 21/2015-Cus dated 01.04.2015.

It was argued that the goods lying unused are not imported goods. He argued that the imported goods namely Seamless Pipes, were not diverted and therefore there was no violation of Condition X mentioned in the Notification 21/2015-Cus dated 01.04.2015. He relied upon para 4.16 of the Foreign Trade Policy 2015-20 to assert that the goods manufactured out of imported goods could be transferred after completion of export obligation.

A Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “It is seen that the condition X of Notification No. 21/2015-Cus dated 01.04.2015, applies only to the goods imported under the duty exemption scheme, whereas the provision of para 4.16 of the Foreign Trade Policy 2015- 20 covers the goods manufactured out of imported goods. It is seen that para 4.16 of foreign trade policy 2015-20 specifically designed to deal with the cases like the instant case.”

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