Bharat Petroleum Wins Appeal: Tribunal Upholds Duty-Free Export Status for Oil Supplies

CESTAT Bangalore Bench Rules in Favor of BPCL, Confirms "Foreign-Going Vessel" Status for ASEAN Explorer

In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Bangalore Bench has delivered a judgment favoring Bharat Petroleum Corporation Ltd (BPCL) concerning duty-free exports of High Viscosity Furnace Oil (HVFO). The tribunal upheld BPCL's appeal against the Central Excise Commissioner's decision, confirming the vessel 'Cable Ship ASEAN Explorer' as a "foreign-going vessel," thus qualifying its oil supplies as duty-free exports under Rule 19 of the Central Excise Rules, 2002, read with Notification No. 46/2001-CE(NT).

The case hinged on whether the supplies of HVFO made by BPCL to the vessel were liable for Central Excise duty or if they qualified as duty-free exports. The vessel, engaged under the South East Asia and Indian Ocean Cable Maintenance Agreement, was previously denied duty-free treatment based on an earlier Customs Order that did not consider it a "foreign-going vessel."

BPCL's legal counsel argued that the supplies were duly authorized and supported by maritime clearances, asserting that the vessel's contractual obligations for submarine cable maintenance classified it as a foreign-going vessel. The tribunal referenced past judgments, notably a 2020 decision by the same tribunal and a subsequent affirmation by the Kerala High Court in 2025, which supported BPCL's position.

The tribunal's decision emphasized that the vessel's temporary berthing and limited activities within Indian territorial waters did not alter its foreign-going status. Thus, BPCL's supplies to the vessel are exempt from Central Excise duty, aligning with the provisions under the Customs Act, 1962, and the Central Excise Rules, 2002.

This ruling not only supports BPCL's operational procedures but also sets a precedent for similar cases, reinforcing the interpretation of "foreign-going vessel" status and the application of duty-free export exemptions under Indian law.

Bottom Line:

Supplies of High Viscosity Furnace Oil (HVFO) to a vessel deemed as a "foreign-going vessel" under Section 2(21) of the Customs Act, 1962, qualify as duty-free exports under Rule 19 of the Central Excise Rules, 2002 read with Notification No. 46/2001-CE(NT).

Statutory provision(s): Section 2(21) of the Customs Act, 1962, Section 87 of the Customs Act, 1962, Rule 19 of the Central Excise Rules, 2002, Notification No. 46/2001-CE(NT).

Bharat Petroleum Corporation Ltd v. Commissioner of Central Excise, Cochin, (CESTAT)(Bangalore)(Regional Bench) : Law Finder Doc Id # 2815869