SUPREME COURT: SUPPLIES TO OFFSHORE OIL RIGS TO ATTRACT CUSTOMS

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The Supreme Court has ruled that companies engaged in offshore operations cannot transship stores to the oil rigs in the Exclusive Economic Zone, which extends to 200 miles (or 370 km) out from the coast, without payment of Customs duty. The apex court dismissed the plea of some companies which had said that the oil rigs engaged in operations in the EEZ or Continental Shelf of India are ‘foreign going vessels’ and are entitled to consume imported stores thereon without payment of Customs duty.

A bench comprising Justice Ashok Bhan and Justice Dalveer Bhandari said, “the supply of imported spares or goods or equipments to the rigs by a ship will attract import duty and the ship employed for transshipment of the goods for that purpose would not be a foreign going vessel under section 2(21) of the Customs Act. The area of discharge or unloading and loading is within India by virtue of the deeming provisions of Sections 6 and 7 of the Maritime Zones Act, 1976. The Customs Act stands extended to the designated areas by virtue of the Maritime Zones Act, 1976. The oil rigs carrying on operations in the designated area is not a foreign going vessel....”

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