13th March, 2002
Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Excise & Customs
Subject: Extension of the jurisdiction of the Customs Act, 1962 and the Customs Tariff Act, 1975 to whole of the EEZ and Continental Shelf under the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976-reg.
I am directed to refer to Board’s letter F.No. 450/76/92-Cus.IV dated 28/9/1994 and Circular No. 28/95-Cus.,dated 27/3/1995 explaining the legal position regarding levy of Customs duty on goods brought into a ‘designated area’ of the Exclusive Economic Zone(EEZ) and levy of central excise duty on oil produced in such areas. It was clarified in these instructions that any oil produced in the off-shore installations in the said ‘designated areas’ or within the Territorial Waters of India would be deemed to be produced in India and subject to the levy of central excise duties under section 3 of the Central Excise Act, 1944. In case, however, the oil is produced at such of the installations which have not been designated by the Ministry of External Affairs and which lie outside the Territorial Waters of India, such oil would be deemed to be imported into India when this oil is transferred to the mainland and be subject to customs duties as specified in the Customs Tariff Act, 1975.
2. The matter has been reviewed by the Government. In this connection, please find enclosed a copy of notification dated 7th February, 2002 issued by the Ministry of External Affairs, whereby the jurisdiction of the Customs Act, 1962 and the Customs Tariff Act, 1975 has been extended to whole of the EEZ and Continental Shelf of India for certain purposes. The purposes specified in the notification are (i) the prospecting for extraction or production of mineral oils in the Continental Shelf and EEZ of India, and (ii) the supply of any goods (as defined in clause (22) of section 2 of the Customs Act, 1962) in connection with any of the activities mentioned in clause (i) above. In the ‘Explanation’ to the notification, it has been clarified that for the purposes of the notification, “mineral oils” would include petroleum and natural gas.
3. The implication of the said notification is that mineral oils extracted or produced in the EEZ and Continental Shelf of India if brought to the mainland shall not be treated as import and therefore, no customs duty shall be leviable on such mineral oils. 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.
4 These instructions may be brought to the notice of all concerned by way of issuance of suitable Public Notice/Standing Orders.
5. Difficulties, if any, faced in the implementation of above instructions may be brought to the notice of the Board. Kindly acknowledge receipt