Aban Loyd Chiles Offshore Ltd. & Anr vs Union Of India & Ors

4. The Appellants are engaged in drilling operations for exploration of offshore oil, gas and other related activities under contracts awarded by the Oil and Natural Gas Commission (for short, ONGC). The drilling operations are carried on at oil rigs/vessels, which are situated outside the territorial waters of India. Until around November, 1993, the Appellants, and all other similarly situated companies which were engaged in oil and gas exploration and exploitation were permitted to transship stores to the oil rigs without levy of any customs duty regardless of the fact whether oil rigs were operating within a designated area or non-designated area.

8. The Central Government issued Notification No. S.O. 429 (E) dated 18.07.1986 under Section 6(5)(a) and Section 7(6)(a) of the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976 (for short, the Maritime Zones Act, 1976) by which certain areas were identified as designated areas. The designated areas are more than 12 nautical miles away from the shore and are outside the territorial waters of India.

12. The Pride Foramer, another oil rig operator, similarly placed to the rig operators covered in Amership Management case (supra) sought permission to clear the ship stores/spares for use on its rig without the payment of customs duty. The said permission was refused. Aggrieved against, Pride Foramer filed Writ Petition No. 1818 of 2000 before the Bombay High Court. The Bombay High Court by its Order dated 24.04.2001 dismissed the Writ Petition. Same is reported as Pride Foramer v. Union of India [(2002) 148 ELT 19 (Bom)].

Likewise, the goods supplied from the mainland to a place in EEZ or Continental Shelf of India in connection with any activity related to mineral oil extraction or production shall not be treated as export under the Customs Act, 1962 and consequently, no export benefits can be availed of on such supplies. Another implication of the said notification is that bringing of any goods from any other country to any place in EEZ or Continental Shelf of India in connection with any activity related to extraction or production of mineral oils shall be treated as import under the Customs Act, 1962 and would be charged to duty accordingly.

Further, mineral oils produced in the EEZ or Continental Shelf of India would be deemed to be produced in India and subject to levy of central excise duties under the Central Excise Act, 1944.

Likewise, the goods supplied from the mainland to a place in EEZ or Continental Shelf of India in connection with any activity related to mineral oil extraction or production shall not be treated as export under the Customs Act, 1962 and consequently, no export benefits can be availed of on such supplies. Another implication of the said notification is that bringing of any goods from any other country to any place in EEZ or Continental Shelf of India in connection with any activity related to extraction or production of mineral oils shall be treated as import under the Customs Act, 1962 and would be charged to duty accordingly.

85. By notification S.O. 429 (E) dated 18.07.1986, and notification S.O. 643 (E) dated 19.09.1996, issued under clause

86. As stated above, contiguous zone is that part of the sea which is beyond and adjacent to the territorial waters of the coastal States. The coastal States though do not exercise sovereignty over this part of the sea, however, they are entitled to exercise sovereign rights and take appropriate steps to protect its revenue and like matters. The police and revenue jurisdiction of the coastal States is extended to the contiguous zone as well.

90. Our municipal law, i.e., Maritime Zones Act, 1976 is not in conflict with the international law, rather the same is in consonance with UNCLOS, 1982.

93. For the reasons stated above, we do not find any merit in these appeals and dismiss the same with costs.