Holding

A delay by the public authority in issuing the essentiality certificate does not defeat the importer’s entitlement to the exemption; the certificate may be produced later and the condition is not a strict precedent.

Summary

The case concerned the customs duty exemption for magnetic tapes (IT software) imported by ONGC and Tullow India Operations Ltd. for seismic surveys under petroleum exploration contracts. The exemption notification required the importer to produce an essentiality certificate from the Directorate General of Hydrocarbons (DGH) at the time of import. ONGC applied for the certificate but it was not issued in time, leading to a provisional clearance and a subsequent Tribunal order denying ONGC’s claim but allowing Tullow’s claim (which had produced the certificate) and remanding the matter to the Commissioner. ONGC appealed, arguing that the delay in issuance of the certificate was due to the public functionary and should not defeat the exemption. The Supreme Court held that the condition to produce the certificate is not a strict precedent when its issuance is delayed by the authority; the importer cannot be penalised for such delay and the exemption may be granted upon later production of the certificate. The Court dismissed the appeal, upheld the Tribunal’s remand, and directed the Commissioner to reconsider ONGC’s claim afresh.

Issues considered

The requirement of producing the essentiality certificate at the time of import under the exemption notification.
Whether a delay by the Directorate General of Hydrocarbons in issuing the certificate defeats the entitlement to exemption.
Whether the condition is a precedent or subsequent condition for the exemption.
Whether a public notice issued by a Custom House can modify the statutory requirement.

Legislation cited

Customs Act, 1962s. Section 12, s. Section 151A, s. Section 18, s. Section 25(1)
Customs Tariff Act, 1975

Subjects

customs duty exemptionessentiality certificateDirectorate General of Hydrocarbonsseismic surveypetroleum operationsinterpretation of exemption notificationpublic functionary delaycondition precedentliberal construction

Judgment

~
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI A
v.
MIS. TULLOW INDIA OPERATIONS LTD.

OCTOBER 28, 2005

(B.P. SINGH AND S.B. SINHA, JJ.] B

Customs Act, 1962 :

Exemption Notification No. 20199-cus dated 28.02.1999-For availing
the benefit of Notification, the importer is required to produce the essentiality c
certificate at the time of import-If issuing authority fails to issue the certificate
in time then importer cannot be denied the entitlement merely on this ground.

Interpretation of statutes :

Exemption Notification not to be construed in a wcry which would prove D
to be oppressive in nature-Eligibility criteria to be construed strictly although
construction of a condition may be given a liberal meaning.

Public Functionary :

Directorate General of Hydrocarbons-Authority to issue essentiality E
certificate-Delay in issuing the certificate-Held: Authority must dispose of
application for grant of essentiality certificate within reasonable time so as to
enable the importer to avail benefit of Notification.

ONGC is engaged in the business of exploration and exploitation of
F
oil and gas. For exploring oil/gas, contracts are awarded to the companies
to carry out seismic survey. In pursuance of the said contracts, a seismic
vessel was brought to India by the contractor for carrying on seismic
survey. For the purpose of recording data of the surveys, magnetic tapes
were also imported.
G
The Notification No.20/99-cus dated 28.2.1999 exempted custom duty
on goods imported in connection with petroleum operations. For claiming
exemption .under said Notification, the importer is required to produce to
"" ... the custom authorities at the time of importation, essentiality certificate
973 H
974 SUPREME COURT REPORTS (2005] SUPP. 4 S.C.R.

A from Directorate General of Hydro carbons.
ONGC had applied for essentiality certificate but could not produce
same at the time of import as the same had not been then granted. As a
result, the provisional clearance of tapes was made.

B Custom authorities issued notice to ONGC asking as to why custom
duty and penalty be not imposed on them for misdeclaring the value of
data tapes. Adjudicating authority held that the ONGC had misdeclared
the value of data tapes and is liable to pay custom duty thereon and penalty
amount. Respondent and ONGC filed appeal before the Tribunal.
C Respondent had claimed that they were entitled to the benefit of
Notification No. 20/1999-cus.

Respondent had also applied and was granted essentiality certificate.
Whereas Tribunal dismissed the appeal of ONGC on the ground that
essentiality certificate had not been produced, it allowed the appeal of
D respondent and remanded the matter back to Commissioner for his
consideration regarding availability of the exemption. The order of
Tribunal is challenged by ONGC and Commissioner of Customs.

Disposing of the appeal and remitting the matter to Commissioner,
E the Court

HELD: I.I. The importers .are licensees. Indisputably, they were
entitled to the benefit of the exemption notification, subject to the condition
that they would produce the essentiality certificate granted by the
Directorate General of Hydrocarbons at the time of importation of goods.
F The essentiality certificate admittedly was not granted by the Directorate
General of Hydrocarbons within a reasonable time. Therefore, importers
could not be blamed therefor. [984-D[

1.2. The Directorate General of Hydrocarbons is under the Ministry
of Petroleum and Natural Gas of the Government of India. The functions
G performed by it are public functions. The notification never contemplated
that a public functionary, having regard to the importance·ofthe subject
matter and in particular when such importations are being made in public
interest, would not dispose of the application for grant of essentiality
certificate within a reasonable time so as to enable the importer to avail
H the benefit thereof. Applications for grant of such certificates, having
COMMISSIONER OF CUSTOMS (IMPORTS!, MUMBAI"· TULLOW INDIA OPERATIONS LTD. 975

regard to their importance, should have been processed by the Directorate A
General of Hydrocarbons as expeditiously as possible but they did not
ctioose to do so probably having regard to the fact that no time schedule
therefor was prescribed. [985-D, E, F,J

P. r Rajan v. TP.M Sahir and Ors. (2003) 8 SCC 498 and Punjab State
Electricity Board Ltd v. Zora Singh and Ors,, (2005] 6 SCC 776, relied on. B
Modest Shipping Agency Pvt. Ltd. v. Collector, (2002) 140 ELT A 95,
referred to.

2. The essentiality certificate granted in favour of ONGC refers to
the notification and the serial number of the tapes. Except for the purpose C
of grant of benefits under the said exemption notification, the said
essentiality certificate would not serve any other purpose whatsoever. It
is not in dispute that the importers were, but for production of the
certificate, otherwise entitled to the grant of benefit in terms of the said
notification. The conditions referred to in Sub-section (1) of Section 25 of D
Customs Act as regard time when such certificate is to be produced would,
, thus, mean those which were within the control and power of the importer.
If it is not within the power and control of the importer and depends upon
the acts of other public functionaries, non-compliance of such condition,
subject to just exception cannot be held to be a condition precedent which
would disable it from obtaining the benefit therefrom for all times to come. E
[984-E, F; 986-A, BJ

3.1. There is no universal law, that fiscal liability cannot be deferred.
In a statute where there is a provision for a provisional assessment and/
or provisional clearance, subject to compliance of certain conditions, such F
conditions may be fulfilled at a later stage, namely, at the stage of final
clearance or final assessment. (986-D[

Commissioner ofCentral Excise v. MP. V. and Engg. Industries, (2003)
153 EL T 485, referred to.
G
3.2. Once an assessee satisfies the eligibility clause, the exemption
clause therein may be construed liberally. An eligibility criteria, therefore,
deserves a strict construction, although construction of a condition thereof
may be given a liberal meaning. [987-E]

Ashok Lanka and Anr. v. Rishi Dixit and Ors,, [2005[ 5 SCC 59S and H
976 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A Colgate Palmolive (!ndiq) Ltd v. MRTP Commissionand Ors., 1200311 SCC
129, relied on.

Jindal Drilling and Indus. Ltd. v. Collector of Customs. Bombay (2001)
138 ELT 1335, held inapplicable.

B 3.3. It is also well-settled that the Legislature always intends to avoid
hardship. In a situation of this nature, the exemption notification cannot
be construed in a way which would prove to be oppressive in nature.
(987-H]

C 4. By reason of a public notice issued by a Custom House situate in
a State, the effect and purport of statutory notification cannot be taken
away. In terms of Section 151A of the Customs Act, it is only the Board,
which may issue instructions. Even under the aforementioned provision,
the Board exercises a limited power. (988-B]

D Pahwa Chemicals (P) Ltd. v. Commissioner of Central Excise, New
Delhi, [2005] 2 SCC 720, relied on.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5900 of2004.

From the Judgment and Order dated 9.12.2003 of the Customs, Excise
E and Service Tax Appellate Tribunal, Mumbai in F.O. No. C-11- 3218/WZB/
2003 in A. No. C/1210 of 2001 MUM.

WITH

1882/2004 and 854 of 2005.
F
A.K. Ganguly and Rajiv Dutta and S. Ganesh, K. Swamy, S. Beno
Bencigar, P. Parmeswaran, Shiv Prakash Pandey, Ms. Rekha Pandey, Shir P.
Pandey, Rohitash S. Nagar, V. Lakshmikumaran, Alok Yadav, Rajesh Kumar
and RS. Suri for the Appearing parties.

G The Judgment of the Court was delivered by

S.B. SINHA, J. Interpretation of notification issued in terms of sub-
section (I) of Section 25 of the Customs Act, 1962 being General Exemption
No. 121 is in question in these appeals which arise out of judgment and order
dated 9.12.2003 passed by the Customs, Excise and Service Tax Appellate
H Tribunal in Appeal No. C/1210/Mum & C/51/2002 Mum.
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI"· nuow INDIA OPERATIONS LTD. [SINHA. l] 977

The relevant portion of the said general exemption notification dated A
28.2.1999 is as under:

"In exercise of the powers conferred by sub-section (I) of section 25
of the Customs Act, 1962 (52 of 1962), the Central Government
being satisfied that it is necessary in the public interest so to do,
hereby exempts the goods of the description specified in column (3) B
of the Table below or column (3) of the said Table read with the
relevant List appended hereto, as the case may be, and falling within
the Chapter, heading No. or sub-heading No. of the First Schedule to
the Customs Tariff Act, 1975 (51 of 1975) as are specified in the
corresponding entry in column (2) of the said Table, when imported C
into India, -

(a) from so much of the duty of the customs leviable thereon under
the said First Schedule as is in excess of the amount calculated at the
rate specified in the corresponding entry in column (4) of the said
Table; D
(b) from so much of the additional duty leviable thereon under sub-
section (I) of section 3 of the said Customs Tariff Act, as is in excess
of the rate specified in the corresponding entry in column (5) of the
said Table,

subject to any of the conditions, specified in the Annexure to this E
notification, the condition No. of which is mentioned in the
corresponding entry in column (6) of said Table.

Provided that nothing contained in this notification shall apply to
goods specified against serial Nos. 174, 175, 176, 177, 178 and 179 F
of the said Table on or after the I st day of April, 2000.

Explanation-For the purposes of this notification, the rate specified
in column (4) or column (5), is ad valorem rate, unless otherwise
specified."

The goods specified in SI. Nos. 182, 184 and 231 of the Table of the G
Notification read as under:

H
978 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A "S.No. Chapter or Description of goods
heading No. or
sub-heading No.
· 182. 84, 85 or any other Goods specified in List 11
Chapter required in connection with
petroleum operations undertaken
B under petroleum exploration
licenses granted by the
Government of India to the Oil
and Natural Gas Corporation or
Oil India Limited on nomination
c basis.
184. 84 or any other Goods specified in List 11
Chapter required in connection with
petroleum operations undertaken
under specified contracts
231. 49 or 85.24 The following goods, namely:- (i)
D Information Technology
Software, and (ii) Document of
title conveying the right to use
Information Technology software
Explanation. "Information
E Technology Software" means any
representation of instructions,
data, sound or image including
source code and object code,
recorded in a machine readable
form, and capable of being
F manipulated or providing
interactivity to a user, by means
of an automatic data processing
machine.
Relevant portion of Condition Nos. 34 and 36 annexed to the said
G notification read as under:-

"34.lf

(a) the goods are imported by the Oil and Natural Gas Corporation
or Oil India Limited (hereinafter referred to as the "licensee") or a
H sub-contractor of the licensee and in each case in connection with
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI''· TULLOW INDIA OPERATIONS LTD. [SINHA. J.) 979

petroleum operations to be undertaken under petroleum exploration A
licences granted by the Government of India on nomination basis;

(b) where the importer is a licensee, he produces to the Assistant
Commissioner of Customs, at the time of importation, the following,
namely, certificate from a duly authorized officer of the Directorate
General of Hydro Carbons in the Ministry of Petroleum and Natural B
Gas, Government of India, to the effect that the imported goods are
required for petroleum operations referred to in clause (a) and have
been imported under the licences referred to in that clause, and .... "

"36. If

(a) the goods are imported by an Indian Company or Companies, a
c
Foreign Company or Companies, or a consortium of an Indian
Company or Companies and a Foreign Company or Companies
(hereinafter referred to as the "contractor") or a sub-contractor of the
contractor and in each case in connection with petroleum operations
to be undertaken under a contract with the Government of India; D
(b) where the importer is a contractor, he produces to the Assistant
Commissioner of Customs, at the time of importation, the following,
namely:-

(i) a certificate from a duly authorized officer of the Directorate E
General of Hydro Carbons, in the Ministry of Petroleum and Natural
Gas, Government of India, to the effect that the imported goods are
required for petroleum operations referred to in clause (a) and have
"
been imported under the contract referred to in that clause, and

(ii) a certificate, in the case of a contract entered into by the F
Government of India and a Foreign Company or Companies or, the
Government of India and a consortium of an Indian Company or
Companies and a Foreign Company or Companies, that no foreign
exchange remittance is made for the import of such goods undertaken
by such Foreign Company or Companies;."
G
Mis. Oil and Natural Gas Corporation Limited (for short "ONGC") is
a Government of India Undertaking and is engaged in the business of
exploration and exploitation of oil and gas on shore and off shore. With a
view to find out the possibility of exploring oil/ gas, they carry out seismic
survey wherefor the contracts are awarded to the companies specializing H
980 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.
I .

A therein. It conducted 3-Dimensional Seismic Surveys in Heera, South Heera
and Neelam areas of the international waters of the West Coast of India in
course of exploration for oil.

M/s. Tullow India Operations Limited (for short "Tullow"), Respondent
in Civil Appeal No. 5900 of 2004 also conducted such surveys in the Gulf
B of Kutch. The processes consisted of creating shock wave by means of
controlled explosions which travel through the waters of the sea and the land
mass beneath. The response to these waves indicates the probability of the
presence of oil or gas deposits. The response to the surveys are recorded on
magnetic tapes and converted to digital form and thereafter processed at the
C Processing Centre using software applications named Seismos. The Central
Processing Centre is located on Indian territory and, these tapes in the form
of cartridges are imported by the assesses who claim exemption from customs
duty in terms of the aforementioned exemption notification. The same tapes
were claimed to be IT softwares.

D It is not in dispute that ONGC awarded two contracts in favour of
M/s. SEDCO Forex Int. Drilling Inc. to carry out the said seismic survey on
or about 15.02.1999 and 9.03.1999 respectively for a consideration of US$ •
13,803,600/- and US $ 2,96,230/- respectively. In pursuance of the said
contracts, a seismic survey vessel, namely, M.V. GECO SAPHIRE was brought
in India by the said contractor for carrying out seismic survey. The said
E seismic survey vessel carried out seismic survey during the period 22.05.1999
and 22.06.1999. The two bills of entry No. BOE NO. 12443 and 9888 were
filed.

A notice to show cause was issued by the Customs Department, Mumbai
F asking the ONGC to show cause as to why:
"(a) 3-D seismic data tapes should not be classified under CTH8524.99
and charged to duty @BCD40% + 16%CVD+4%SAD and M.V.
GECO SAPPHIRE should not be classified under CTH 8905.20 and
charged to duty @40% + 8%CVD + 4% SAD.
G (b) Value of 3-D seismic data tapes should not be ascertained at US$
13,803,600 + US$2,968,230 = US$16,771,830 =Rs. 72,11,886,90
and value of the vessel M.V. Geco Sapphire be ascertained as
US$45,000,000 =Rs. 193,50,00,000 on the basis of contract provided
by you under section 14 of Customs Act, 1962 read with Rule 4 with
H adjustments as provided under Rule 9 of Customs Valuation
COMMISSlONER OF CUSTOMS (IMPORTS), MUMBAI 11• TULLOW TNDIA OPERA.TIONS LTD. [SINHA, J.) 981

(Determination of Price of Imported Goods) Rules, 1988. A
(c) Customs duty of Rs. 160,46,18,960 on the assessable value should
not be demanded from you under the provision of Section 12 of the
Customs Act, 1962.

(d) 3-D seismic data tapes and M.V.GECO SAPPHIRE and equipments B
valued at Rs. 72, 11,88,690 and Rs. 194,50,00,000 respectively
imported illegally should not be confiscated under section 111 (m)
and 11 l(o) of Customs Act, 1962.

(e) Penalty under section 112(a) of Customs Act, should not be
imposed on importer." C
In reply to the aforementioned show cause notice, ONGC filed a reply
wherein the technical aspect of the matter had been stated in para 4.22 thereof.
It was further contended that in a seismic vessel, there is no connectivity
between the ship and the mother earth while the drilling rigs/ production
platforms have. D
However, it is also not in dispute that ONGC had applied for grant of
exemption certificate before the Directorate General of Hydrocarbons in the
month of April, 1999. The said essentiality certificate, however, could not be
produced before the appropriate authority when importation took place as the
same had not thence been granted as a result whereof a provisional clearance E
of the said tapes was made on 6th September, 1999. The appeal thereagainst
before the Tribunal came to be dismissed in December, 2003. Essentiality
certificate, however, was granted in favour of ONGC on 23.6.2004.

Tullow had also applied for grant of essentiality certificate. Whereas
ONGC could not produce essentiality certificate before the Tribunal, Tullow F
did.

The Tribunal rejected the contention of the importer that the said
cartridges would come within the purview of expression "IT Software" within
the meaning of the said provision. The Tribunal, in its judgment impugned G
before us, despite holding that the benefit of exemption from duty on imported
goods contained in the notifications should not be denied merely on the
ground that the certificates were required to be produced at the time of
importation only, dismissed the appeal of the ONGC on the ground that the
same had not been produced even before it and allowed the appeal of Tullow
and remitted the matter back to the Commissioner for his consideration as H
982 SUPREME COURT REPORTS (2005) SUPP. 4 S.C.R.
4 -

A regards acceptability thereof and consequently upon the availability of the
exemption and related matter.

ONGC and the Commissioner of Customs, Mumbai are, thus, in appeal
before us.

B ONGC before this Court filed an application for urging additional
grounds before this Court that it may be permitted to rely upon the said
essentiality certificate dated 23.6.2004.

It also filed an application before the Tribunal praying for recall of the
said order dated 27 .9 .200 I relying on or on the basis of the said certificate,
C but the same was rejected on the ground that the matter is pending before this
Court. An appeal has been filed thereagainst also by ONGC.

The learned counsel appearing on behalf of the ONGC would raise
·three contentions in support of these appeals.

D (i) The value of services, which are rendered under a pure service
contract cannot be subjected to customs duties on the ground
that the results of seismic surveys are recorded in tapes or discs
and, thus, would not be 'goods' within the meaning of provisions
of Customs Act, 1962.
E (ii) The exemption notifications having been issued for exemption
of goods imported in India for petroleum exploration subject, of
course, to filing of the essentiality certificate issued by the
Directorate of Hydrocarbons and as such an essentiality certificate
had been _Produced even before this Court, it is entitled to such
exemption.
F
(iii) In any event, having regard to the fact that the Tribunal accepted
such essentiality certificate in the case of Tullow, there is no
reason why the same benefit would not be granted in its favour.
In any event, as the tapes and discs are softwares within the
meaning of Serial No. 231 of the Notification, it is entitled to the
G benefit of the aforementioned exemption notification No. 20 of
1999 having regard to the fact that the same has liberally been
construed in terms of the explanation appended thereto.

Mr. V. Lakshmikumaran, learned counsel appearing on behalf of •
H 'Tullow' relied upon a public notice issued by the Madras Custom House and
- . COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI"- TULLOW INDIA OPERATIONS LID [SINHA, I.] 983

would submit on the basis thereof, which reads as under: A
"The following clarifications are hereby notified for information of
importers, Clearing Agents and others concerned:

SI. No. Subject Clarification

7. Applicability of various If the substantive clauses of a B
certificates required under notification are fulfilled by an.
different notifications importer, concessional
issued after the date of assessment should not be
importation denied on the ground of
time factor."
c
Relying on or on the basis of said public notice, it was submitted that
on the same reasoning production of the essentiality certificate even at a later
stage could serve the purpose.

Mr. A.K. Ganguly, learned senior counsel appearing on behalf of the
Commissioner of Customs (Imports), Mumbai, on the other hand, submitted D
that the exemption notifications are required to be construed very strictly and
in view of the fact that a condition precedent has been attached thereto,
namely, production of essentiality certificate at the time of importation,
triggering event cannot be shifted to a later date. It was submitted that if it
be held that production of such certificate at any point of time is considered E
to be sufficient compliance for the purpose of obtaining benefit under the
said exemption notification, the same will have to be read in the manner that
it was not necessary to be produced at the time of importation. Even if such
a construction is possible, the learned counsel would contend that the same
should be produced only within a reasonable time, particularly, in view of the
fact that the exemption notification was valid for one year. F

As regard public notice issued by the Madras Custom House, the learned
counsel urged that one issued by a particular Custom house cannot be equated
with the circular issued by the Board in exercise of its statutory power under
Section 151 A of the Customs Act. The exemption notification being a statutory G
one cannot be clarified by one custom house as the same must emanate from
a notification issued by some authority.

Mr. Ganguly argued that the Customs Act makes a difference between
the certificates which are conditions precedent and those which are conditions
subsequent as would appear from Section 18 of the Act. Reliance in this H
984 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.
•-
A behalf has been placed on Jindal Drilling and Indus. ltd. v. Collector of
Customs, Bombay, (2001) 138 ELT 1335. Our attention has been drawn to
an order of this Court dated 11.05.2000 passed by this Court dismissing the
SLP (Civil) CC No. 3364 of 2000 filed thereagainst by Modest Shipping
Agency Pvt. Ltd., reported in [2002 (140) ELT A 95]

B It was further urged that the public notice issued by the Madras Custom
House refers to certificates which may be necessary to be produced within
the meaning of the provisions of the Customs Act as, for example, certificate
to prove country of origin or certificate to prove valuation, as may be
necessary, by reason of the conditions imposed for import which are not

c conditions precedent or exemption notification.

Both the importers are licensees. Indisputably, they were entitled to the
benefit of the exemption notification subject, of course, to the condition that
they would produce the essentiality certificate granted by the Directorate
General of Hydrocarbons at the time of importation of goods. Grant of
D essentiality certificate was not in the hands of the assesses. It was a function
of a department of the Central Government. The essentiality certificate
admittedly was not granted by the Directorate General of Hydrocarbons within •
a reasonable time. The importers could not be blamed therefor. It is possible
that delay in granting the said essentiality certificate was by way of default
on the part of the authorities concerned.
E
The essentiality certificate granted in favour of ONGC refers to the
notification, the relevant certificate number of the table, list 11 and condition
number 34 or 36, as the case may be, of the notification. It even refers to the
serial number of the consignments. The serial number of the tapes had also
been mentioned therein. Except for the purpose of grant of benefits under the
F
said exemption notification, the said essentiality certificate would not serve \
any other purpose whatsoever.

Construction of an eligibility clause contained in an exemption
notification depends inter alia upon the purpose for which an exemption is
G sought to be granted. The exemption notification was issued by the Central
Government in exercise of its power conferred upon it under Sub-section (I)
of Section 25 of the Customs Act. An exemption thereunder is granted, if the
Central Government is satisfied that it is necessary so to do in public interest.
Such exemption can be granted either absolutely or subject to such conditions,
as may be specified therein. Such conditions are required to be fulfilled
•
H before or after clearance as may be specified. Such exemption would be in
COMMISSIONER OF CUSTOMS (IMPORTS). MUMBAI •·. TULLOW INDIA OPERATIONS LTD. [SINHA J] 985
' )
relation to the goods of specified description from the whole or any part of A
duty or customs leviable thereon.

Serial Nos. 182 and 184 of the notification refer to the goods falling
under Chapter 84 and specified in List 11 required in connection with
petroleum operations undertaken by a licensee.
B
ONGC is a licensee for exploration of petroleum products. ONGC has
specifically been mentioned at Serial No. 182 of the said notification. It is not
in dispute that importation, if any, has been made in connection with petroleum
operations to be undertaken under petroleum exploration licenses granted by
the Government of India on nomination basis. The benefit of exemption
notification would inter alia be available to the licensee if it is shown in terms C
of a certificate granted by the Directorate General of Hydrocarbons and the
Ministry of Petroleum and Natural Gas that the imported goods are required
for petroleum operation referred to in clause (a) of condition No. 34 and
under the licence referred to herein.
D
The Directorate General of Hydrocarbons is under the Ministry of
Petroleum and Natural Gas of the Government of India. The functions
performed by it are public functions. The notification never contemplated
that a public functionary, having regard to the importance of the subject
matter and in particular when such importations are being made in public
interest, would not dispose of the application for grant of essentiality certificate E
within a reasonable time so as to enable the importer to avail the benefit
thereof. Applicants for grant of such certificates, having regard to their
importance, should have been processed by the Directorate General of
Hydrocarbons as expeditiously as possible but they did not choose to do so
probably having regard to the fact that no time schedule therefor was F
prescribed. It is trite that when a public functionary is required to discharge
its public functions within a time specified therefor, the same would be
construed to be directory in nature. [See P. T. Rajan v. T. P. M Sahir and Ors.,
[2003) 8 SCC 498 and Punjab State Electricity Board Ltd. v. Zora Singh and
Ors., [2005) 6 SCC 776)
G
Both the Customs Department and Ministry of Petroleum and Natural
Gas are departments of the Central Government. The substantive provisions
which were required to be complied with for the purpose of obtaining the
benefits under the said exemption notification have indisputably been complied
with. It is not the case of the department that the assesse has anything to do
with the grant of certificate except to pursue the matter to the best of its H
986 SUPREME COURT REPORTS (2005] SUPP. 4 S.C.R.
I ,
A abilities. It is not in dispute that the importers were, but for production of the
certificate, otherwise entitled to the grant of benefit in terms of the said
notification.

The conditions referred to in Sub-section (I) of Section 25 as regard
time when such certificate is to be produced wou Id, thus, mean those which
B were within the control and power of the importer. If it is not within the
power and control of the importer and depends upon the acts of other public
functionaries, non-compliance of such condition, subject to just exception
cannot be held to be a condition precedent which would disable it from
obtaining the benefit therefrom for all times to come.
c It is no doubt true that the fiscal liability has to be certain. There
cannot, however, be any doubt that in a case of this natu~e ONGC being a
government company for all intent and purport was also certain that it would
get the requisite exemption, subject of course, to its fulfilling the condition
of obtaining such essentiality certificate.
D
There is no universal law, as was suggested by Mr. Ganguly, that fiscal
liability cannot be deferred. In a statute where there is a provision for a
provisional assessment and/ or provisional clearance, subject to compliance
of certain conditions, such conditions may be fulfilled at a later stage, namely,
at the stage of final clearance or final assessment.
E
The question may be considered from another angle. The Directorate
General of Hydrocarbons was indisputably aware about the existence of such
exemption notification. The certificate in accordance with law has not only
been granted, the same expressly refers to the exemption notification, the
entry of the table, the relevant clauses applicable therefor also the bills of
F entries dated 22.05.1999 and 22.06.1999. Indisputably, therefore, the
Directorate General of Hydrocarbons was aware of all r~quisite requirements
necessary therefor. It may presume that the department was also aware of the
provisions of the Customs Act and the consequences likely to be suffered by
the importer in the event of its inability to produce the same before the
G competent authority at the time of importation. The exercise undertaken by
the said department, thus, was not to end in futility.

In almost a similar situation, the question came up before this Court in
Commissioner of Central Excise v. M.P. V & Engg. Industries, (2003) 153
EL T 485 (wherein one of us, B.P. Singh, J. was a member) which was
H answered stating that an assessee although was otherwise entitled to obtain
COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI, . TULLOW INDIA OPERATIONS LID. [SINHA. J] 987
. ' the benefit of an exemption certificate, the same should not ordinarily be A
denied to it because of any administrative delay over which he had no say
in the following words:

".. .In a case of this nature it is only reasonable to take the view that
the benefit of exemption will accrue to a unit found to be a small-
scale industrial unit from the date on which the application was made B
for the grant of registration certificate. Such a unit should not be
deprived of the benefit to which it is otherwise entitled as a small-
scale industrial unit merely because the authorities concerned took
their own time in disposing of the application. We therefore, agree
with the majority view of the Tribunal and hold that the benefit of C
exemption under the notification in question should be extended to
the respondent with effect from the date on which the application for
grant of registration was made by it before the competent authority."

The essentiality certificate, thus, must be treated to be a proof of the
fact that the importers have fulfilled the conditions enabling them to obtain D
the benefit under the exemption notification.

The principles as regard construction of an exemption notification are
no longer res integra; whereas the eligibility clause in relation to an exemption
notification is given strict meaning wherefor the notification has to be
interpreted in terms of its language, once an assessee satisfies the eligibility E
clause, the exemption clause therein may be construed liberally. An eligibility
criteria, therefore, deserves a strict construction, although construction of a
condition thereof may be given a liberal meaning.

The decision of this Court in Jindal Drilling and Indus. Ltd, (supra),
relied upon by Mr. Ganguly has no application to the facts and circumstances F
of the instant case.

It is true that ordinarily, the golden rule of literal interpretation must be
given effect to. But it is also well-settled that where literal interpretation
gives rise to an anomaly or absurdity, the same should be avoided. [See G
Ashok Lanka and Anr. v. Rishi Dixit and Ors., [2005] 5 SCC 598] Colgate
Palmolive (India) Ltd. v. MRTP Commission and Ors. [2003] I SCC 129].

Furthermore, it is also well-settled that the Legislature always intends
to avoid hardship. In a situation of this nature, the exemption notification
cannot be construed in a way which would prove to be oppressive in nature. H
988 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A However, we do not intend to lay down a law that delay on the part of the
authorities in granting such certificates would automatically enable an assessee
to obtain refund. Each case has to be judged on its own facts.

We, however, do not agree with the contention of Mr. Lakshmikumaran
that by reason of a public notice issued by a Custom House situate in a State,
B the effect and purport of statutory notification can be taken away. In terms
of Section 151 A of the Customs Act, it is only the Board which may issue
instructions. Even under the aforementioned provision, the Board exercises a
limited power. (See Pahwa Chemicals (P) Ltd. v. Commissioner of Central
Excise, New Delhi [2005] 2 SCC 720].
c Having regard to the facts and circumstances of this case, we are of the
opinion that the Tribunal has committed no illegality in remitting the mater
back to the Commissioner. Civil Appeal No. 5900 of 2004 is, therefore,
dismissed.

We for the reasons aforementioned remit the matter to the Commissioner
D
for similar purpose in the matter of ONGC for consideration of the matter
afresh. The Commissioner is directed to send a copy of its order to this Court.
Other contentions raised by the parties herein shall remain open. It is made
clear that in the event the order of the Commissioner goes against the
contentions of the assessee Tullow, it will be open to it to question the
E correctness thereof before an appropriate forum.

Civil Appeal Nos. 1882 of 2004 and 854 of 2005 are adjourned sine
die. These appeals shall be listed as and when the order of the Commissioner
is received.

F D.G. Appeal disposed of.

\