Dismissed

AAAR/AP/05(GST)/2020 of M/s Halliburton Offshore Services Inc. (Drill Bits)

GST AAAR28 Sept 2020AAAR/AP/05(GST)/2020

Case brief

AI extract

What is this about?

The Appellate Authority for Advance Ruling rejected Halliburton Offshore Services' appeal against an order requiring two separate Essentiality Certificates—one for import customs duty and another for GST exemption—and upheld the need for distinct certificates for two distinct supplies.

What did the court decide?

The appeal was dismissed and the impugned ruling pronounced by the Authority for Advance Ruling was upheld without modification.

AAAR/AP/05(GST)/2020 of M/s Halliburton Offshore Services… — GST and Indirect Tax | GST AAAR (2020)

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{{aal.*it \dad

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BEFORE THE APPELLATE AUTHORITY FOR ADVANCE^RULING for the State of Andhra Pradesh^(Goods and Service^Tax)

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(Office at O/o Chief Commissioner of State Tax, Govt. of A.P., D^NO 5-56,^Block-B, R.K.Spring Valley Apartment, Bunder^{Road,Edupugallu, Vijayawada,}

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Andhra Pradesh - 521151)

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Present:

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Sri PEEYUSH KUMAR (Member)^(State Tax)

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Sri NARESH PENUMAKA^{(Member) (Central Tax)}

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The 28th day of Septenrber, 2020

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Order /AAAR/AP/ 05(GST) 12020

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Name and address of t hef,e I M/s. H;lliburton Offshore Services Inc
appellant | (oritt Blts),
Plot No,5A3, Unit-2, ADB Road,
I Vakalpudi, East Goclavari District-
-2 ] 533004, Andhra Pr;rdesh.
GSTrN 1 37A,AACH5154M1ZC
3
Date of filing of Form GSf I 03.{17.2020
ARA-02
l
4
Date of Personal Hearingr | 23.t19.2020
5-
Authorized Representative ] tt! Prasad Paranjape, Advocate
6 Jurisdictional Authority - I Superirrtendent, Ramanayyapeta Rangc,
Centre I Kal<inada CGST Division.

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(Under Section 1O1 of the Central Goods and Service^{Tax Act and the} Andhra Pradesh Goods and Service Tax Act).

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At the outset, we would like to make it clear that the^{provisions of both the CGST Act} and the APGST Act are the same except^{for certain provisions.Therefore, unless a} mention is specifically made to such^{dissimilar provisions,a reference to the CGST} Act would also mean a reference to the same^{provisions underthe APGST Act.}

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The present appeal has been filed under Section^{100 of the CentralGoodsand} Services Tax Act, 201,7 and the^{Andhra Pradesh Gorcdsand ServicesTax Act, 2017} [hereinafter^{referred to as "the CGSTAct and APCiSTAct"] by M/s. Halliburton} Offshore Services Inc.^(herein after^{referred to as the "Appellant") against the} Advance Ruling No. AAR No.O7lAPlGSTl2O2O^{dated 25.O2.2O2OAuthority} for Advance Ruling, Andhra Pradesh.

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Brief Facts of the Case:

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l-, The appellant is engaged in^{supply of comprelrensiverange of oilfield related} services such as drilling services,^{explorationand mining related services, etc. to} oil exploration and^{production comPanies acrossthe globe'}

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One of the goods supplied by the appellant in the course of supplying drilling services is drill bits. Drill bits are cutting tools used to remove material to create holes of circular cross -section in the extraction of natural gas, or petroleum, for the injection of a fluid from surface to a subsurface reservoir.

¶18

The appellant was awarded a contract by ONGC to supply drill bits on consignment basis i.e. sale on approval basis at ONGC's twelve different locations based on the call out orders received from ONGC.

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Pursuant to the above, the Appellant imports drill bits and avails the benefit under Sr.4O4 of Notification No.50/2017- Cus. Dt: 30.06.2017. Subject to satisfying the conditions at Sr. No.48, i.e. on filing the Essentiality certificate obtained from the Director General of Hydrocarbons, Noida. Accordingly the Appellant pays total customs duty at the rate of 57o i.e., Basic Customs Duty ('BCD')-0%o + Integrated Goods and Services Tax ("IGST")-5o/o on the specified Goods.

¶20

In terms of entry at serial no.404 of Customs Notification, a concessional rate of Customs duty (BCD-NIL and IGST-5o/o) is prescribed for specified goods mentioned in List 33, required in connection with petroleum operations undertaken under petroleum exploration License or Mining Leases granted by the Government of India to ONGC. The drill bits are mentioned at serial no. 7 of List 33 in the Customs Notification.

¶21

The appellant charged. and deposited GST at the rate of 18o/o under the HSN 82071900 for the supply of the imported bits at tlre price agreed in the contract.

¶22

The Central Government has issued Notification No.3/2OL7- Central Tax (Rate) dated 28 June 2017 wherein it has been provided that the intra-state supply of taxable goods to licensee i.e. the customers shall be taxable at the rate of 2.5o/o if the customer produces before the jurisdictional GST authority an EC obtained from DGH certifying that the said goods are required for petroleum operation. Identical Notification No.3/20L7- Integrated Tax (Rate) dated 28.06.20L7 has been issued under the Integrated Goods and Services Tax Act, 2017. Similarly, the State of Andhra Pradesh has provided similar benefit under the Andhra Pradesh Goods and Services Tax Act, 20t7 (vide Notification No.G.O.Ms.No,5B3 dated 12th December 20t7).

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In the above circumstances the appellant approached the Advance Ruling Authority-Andhra Pradesh for Ruling on the following queries:

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. Whether the import of drill bits for supply to ONGC at its location in India on consumption basis involves two supplies narnely,

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. Import of drill bits into India; and

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. Indigenous movement from the port of import to ONGC's location.

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1. If two supplies are involved in the above mentioned transaction, then whether

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two Essentiality Certificates ('EC') are required to be issued i.e.

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. One for import of drill bits into India under serial no.404 of Notification

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No.50/2017- Customs dated 30.06.2017 and

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. Another for indigenous^{movement under Ncltification No'3/2-017- Central Tax} (Rate) dated 28.06.20ll '

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If answer to^{(a) above is no, then whether the supply of drill bits to oNGC in}

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1. India will be covered^{by serial no.404 of NotificationNo 5012071-Customs dated} 30.06.20L7^(i,e. under^{single EC) and no two separate ECs are required'}

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The Authority for^{Advance Ruling Andhra Pradesh in ruling orders in} AARNo. 07/APIGST/2O2O^{dated 25.02.2020held:}

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That the Import^{and subsequentsupply to oNGC on consignment basls i'e' on} approval basis^{are two distinct Suppliesas prescribed under the CustomsAct} and GST Acts'

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As the Import^{and supply to oNGCare distinct supplies, the applicantneeds} to furnish different^{Essentiality Certificatesthat is to say one at the time of} lmport to the Custom^{Authorities and anotherat the time of supply to ONGC} to the GST Authorities,^{to avail the Concession/Exemption'}

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Aggrieved by the^{order of Authorityfor Advance Ruling dated 25.02.2020 the} Appellant has^{filed the present Appeal,inter alia, on the followlnggroundswhich} are urged without^{prejudice to each other:}

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2. Grounds of APPeal:

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A. It is submitted^{that the impugned rulingpassedby the Ld. Authority is ex-facie} untenable and unsustainable^{in law and is liable to be set aside'} IMPORT OF DRILL BITS^{MANUFACTURED BY HESI IS INEXTRICABLY AND}

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DIRECTLY LINKED^{TO CONTRACTENTEREDINTOWITH ONGC.}

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B. As stated in the facts^{above,the Appellant has entered into a contract with ONGC} for supply of drill bits^{manufacturedby HESI.Tlris would entail, import ofthe} premium drill bits by the Appellant. Post import,^{the said drill bits are supplied at} the respective ONGC^{locationson "sale on consignment/ approval basis"'Once} the said drill bits are^{delivered at ONGC's location, they are storedin ONGC's} storage space till the same^{is used/ consumed/returnedby ONGC'}

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C. Considering the^{fact that the supply to ONGC is on consignmentbasis/ sale on} approval basis, in terms of^{Section 24 of the Sale of GoodsAct, 1930 the sale will} be complete only when^{ONGC has slgnified rrr informed about their approvalor} kept the goods till the^{lapse of the prescribed/reasonable time' The said section} 24 of the Sale of Goods^{Act, 1930 is reproduced below:}

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"24. Goods sent on approval or "on Sale^{or return"} -^{when goods are} delivered to the buyer^{on approvalor "on sale or return" or other similarterms} the property therein^{passes to the buyer-}

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(a) When he signifies his^{approval or acceptance to the seller or doesany} other act adopting^{the transaction;}

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(b) If he does not signify^{his approvalor acceptanceto the seller but retains} the goods without^{givingnotice of reiection, then if a time has been fixed}

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for the return of the goods, on the ex:piration of such time, and if no time has been fixed, on the expiration of a reasonabre time.,,

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D' As stated above and as stated in detail in para 20 of the application filed by the appellant before the Ld. Authority, the said transaction of supply of drill bits to ONGC entails 2legs viz. (1) import of drill bits from HESI and (ii) supply of imported drill bits to the agreed 12 locations of oNGC.

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E. Admittedly, the section under the GGST AcI/APGST AcI/IGST Act providing for the levy of the applicable GST on the aforesaid 2 transactions are distinct i.e. the charging section providing for the levy of IGST on import and for levy of CGST and SGST or IGST on supply of goods to oNGC for sale on approval basis is different.

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F. The Ld. Authority in para 8.3 and 8.4 of the impugned Ruling has observed that:

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i) r is a self-asserted and admitted fact on record that the appellant, under contractual obligation, is required to import drill bits by themselves as importer and undertake to supply drill bits to the delivery location of

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NGC on consignment basis i.e., sale on approval basis.

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terms of section 7(2) of the IGST Act, the supply of goods imported o territory of India, till they cross the customs frontiers of India shall treated to be a supply of goods in the CoUrs€ of inter - state trade or

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iii) ll the clearance by the customs authorities i.e. issuance of out of arge, the supply of goods shall be treated as 'inter-state supplies, and terms of the proviso to section 5 of the IGST Act, the IGST on the s imported shall be levied and collected in accordance with the

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isions of the Section 3 of the Customs Tariff Act, 1975.

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iv) nce the goods imported are cleared by the customs Authorities, all the visions of the customs law ceases to be applicable or extendable to

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uch goods.

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v)I is, therefore, clear that the activity of import of drill bits is a distinct ivity of supply of goods in the course of inter-state trade or commerce.

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G. It is su ed that in compliance with the above observations the Appellant paid the appl ble customs duty at the time of import of goods and the cGST/SGST or or IGST (As applicable) on the supply of said imported goods to 12

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different locations of ONGC, as agreed to in the contract.

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H. It is sub itted that the Ld. Authority has, however, failed to consider the fact that the nsaction of import of drill bits manufactured by HESI is inextricable and di y linked with the contract entered into with ONGC. It is also not the case of th Ld. Authority that the goods imported from HESI and those supplied to ONGC are not the same.

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I. From the rms of the contract entered into with^{ONGC and the other import} documen as referred to in the statement of facts above, it is clear that:

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i) The ntract entered into with ONGC has occasioned the import of drill bits by e appellant.

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ii) rh said imported goods are entirely for supplying to ONGC under the a said contract.

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iii) In rms of Clause L4 of the Contract, at its sole option, ONGC may o right purchase suitable bits at the end of the contract^period. The I r drill bits which are not used or returned back by ONGC are uired to be re-exported by the appellant.

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J. In view of the aforesaid, it is submitted that the lmport of drill bits from^HESIis directly an inextricably linked to the contract entered into with ONGC.

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The pellant is entitled to the benefit of concessional rate under Notification

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No.3/20 1 - Central Tax (Rate) dated 28.06.2017.

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K. As di in the facts above, since the imported drill bits are required for^oil and Gas/ leum operations, they are entitled to benefit of concessional import duties u er Sr.No,404 of the Customs Notification. The said exemption^is available respect of the goods covered in list 33 annexed to the said notification and is su rject to satisfying the conditions prescribed at condition no.48 annexed

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to the sa Notification.

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L. One of e conditions^prescribed under thr: said condition^{no.48 to customs} Notificati is that the importer should furnish an EC from the DGH^{inter alia} certifyin g that the imported goods are required for^petroleum operations.^The releva nt of the said condltion is reproduced below:

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"whe the importer,-

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i) Is a contractor, he produce:s to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the^case may be, at the time of importation, the following, namely:-

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1. A certificate from a duly authorized officer of the Directorate General of Hydro Carbons in the Ministry of Petroleum and^Natural Gas, Government of India, to the effect the imported^{goods are} required for:-

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Petroleum operations referred to in sub-clause⁽ⁱⁱ⁾ of clause^(a) and have been imported under the cont'ract referred to in that sub-clause, or

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Petroleum operations or coal bed methane operation^{referredto in sub-}

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clause (iii) of clause (a), as the case may be, and^{have been imported} under a contract signed under the New Exploration^{Licensingpolicy or} the Coal Bed Methane Policy or the Marginal^{Field Policy, as the case} may be; and".

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M. The speci EC dated 20 september 2077 issued by the DGH, as reproduced in statemen of facts at para 9 above, certifies that the imported goods are requirerd for petro m operations undertaken under petroleum exploration licenses or mining li nses granted to ONGC. The said EC is addressed to the concerned Deputy missioner at the port of import and bears reference to customs Notificatio

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N. Similar the above, vide central Tax Not.ification exemption is provided to indigenou goods supplied for specified p€trrcleum and other explorations and produ under the various schemes from :so much of the central tax leviable thereon u der section 9 of the GGST Act, ils is in excess of the percentage prescribed and subject to the relevant conditions annexed to the notification. Drill bits impo are covered at serial no. 7 of the list of goods annexed to the said Notificati . The condition prescribed is identical to that under the customs Notificatio referred above. Relevant extract of the condition prescribed to the Central Ta Notification, reads thus:

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"(ii) is a contractor, he produces to the Deputy commissioner of central Tax

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or the istant Commissioner of central Tax or the Deputy Commissioner of State Tax r the Assistant Commissioner of State Tax, as the case may be, having

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jurisdicti over the supplier of goods, at the time of outward supply of goods, a certificate from a duly authorised officer of the Directorate General of Hydro Carbons it the Ministry of Petroleum and Natural Gas, Government of India, to the effect tha the goods are required for

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A) Pe m operations referred to in sub-clause (ii) of clause (a) under the contraft referred to in that sub-clause, or

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B) Petroleum operations or coal bed methane operations referred to in subclause (iii) of clause (a), as the case may be, under a contract signed under the new exploration Licensing Policy or the coal Bed Methane Policy or the Marginal Field Policy, as the case may be;"

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O. Upon the perusal of the above, it is submitted that the key requirement of the condition prescribed under both the Notifications is to produce the EC from the DGH certifying that the goods are required for petroleum operations. The only difference is that the EC stated as a condition under the Customs Notification is to be produced before the Assistant Commissioner/Deputy Commissioner of Customs and under the Central Tax Notification is to be produced before the Assistant Commissioner /Deputy Commissioner of Central Tax. This difference is also because the Notifications are issued under the respective Acts. The key purport of both the conditions is the same.

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P. It is submitted that both the conditions say that an EC is required to be produced before the concerned Assistant Commissioner /Deputy Commissioner and does not say that it has to be addressed to the concerned Assist.ant Commissioner/ Deputy Commissioner under the Customs Act clr under the CGST/SGST Acts. Also,

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2 under either^{of the} there isⁿ requirement in the^{conditionprescribed} which the exemPtion is Notificatio to mention the^{Notification numberunder} being clai using that certificate.

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Q.^Admittedl ,^{the recommendation for granting of the EC is made by ONGCfor the} goods to imported by the appellant^{and to be supplied to ONGC whichwould} be requi for the^petroleum operations.^{As submitted above, the samegoods} which are mported by the appellant^{are required for the petroleum operations} carried ou by ONGC.

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R. Is it sub tted that the DGH^{issues the EC qua the Goods.once it} , is established ONGC, there

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that the me imported^{goods are supplied by the appellantto} for the fufther

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cannot be any requirement for^{procuringa newEC from the DGH} supply of e same imported^goods.

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S. It is su tted that the DGH also^{recognizes tlris concept and issues only 1 EC for} the same goods. ONGC, as well does not^{make further recommendation/} for issuance of a second^{EC in respectof the same imported goods}

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applicatio further su lied domestically.

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T. It is sub ed that the appellant agrees^{with the finding of the Ld. Authority that} the benefi or exemption of a Notification^{(conditionalin nature)is available or} eligible the goods, only if the conditions specified^{therein are fulfilled or} complied ith.

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U. It is su tted that the Ld. Authority^{has not appliedits mind or given any finding} on the fa that purport of the conditions^{attachedto the Notificationis merely} that the H should certify that the^{goods prrocuredare requiredfor petroleum} operati The condition, exemption and the certificate^{are issued qua the goods.} Once, it i not in doubt that there exists a certificate^{from DGH certifyingthat the} goods in uestion are required for^{petroleum operations, conditionprescribed} under bot the Notifications stands complied^urith.

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V. The app llant refers to and relies upon the^{judgementof the Hon'ble Supreme} Court in e case of Commissioner of Customs^{vs. Tullow India Operations} Ltd.- 2 5 (189) ELT 401(SC). In this^{case, the Hon'ble Supreme Court held} that once the EC is^produced it should^{be construed to be sufficientcomplianceof} the notifi ion and any delay in^{producingthe same should not disentitlethe} importer rom the benefit of the notification.^{In the present case, applying the} said ratio the appellant has indeed^{producedEC which is issued by the competent} authority contemplated in the^{notification and certifying what is contemplatedin} the notifi tion viz. that the^goods are^{requiredfor petroleum operations.}

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W. The Ho 'ble Supreme Court further held that^{the eligibilityclause in relationto} an exem ion notification should be^given strict rneaning and the^{notificationhas} to be int preted in terms of its language; however, once an assessee satisfies^the

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eligibility ause, the exemption^{clause therein may be ConStruedliberally. In the} present c S€, sinCe the Director^{General of Hydrocarbon has issued the EC} certifying t the goods are required^{for petroleum operations,even if the said} EC is not ddressed to the^{officer under the CGSTAct, that shouldnot disentitle} the appli from the benefit of^{the notificationwithout challengingcorrectness} of the sa EC. Admittedly, once the^{benefithas beengranted under the customs} notificat by relying upon the same^{EC. The correctnessof EC cannot be in any} doubt.

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X. In anoth CaSe, the Hon'ble^{Bombay High Court in the case of Larsen & Toubro} Ltd Vs. I - 2013 (298)^{ELT 217 (Bom) had an occasion to rule on the} sanctity Essentiality Certificate.^{In the said case, the dispute was whetherthe} EC can b issued to an importer^{or a sub-contractor in the contract. The court} held that once the^goods are^{found to be eligible and EC is issued, the same} cannot challenged or cancelled.^{In the present casetoo, once the EC is issued,} the officer has to honor^{the samefor the purpose of extendingthe benefit} of the ex ption notification. Drawing ratio^{from the rulin.g of the Court,EC is qua} the good and not^qua the transaction.

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Y. It is su itted that the Ld. Authority^{in the Rulinghas merely observedthat for} benefit under Central^{Tax Notification, the conditions attached to the}

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claiming Notificat n are required to be^{fulfilled.Ithas not gone into the issue as to} whether EC issued by the^{DGH in respectof the same goods, which has been} accepted the Customs Authorities^{for applying concessionalcustoms duty rate,} is suffici t for compliance of the condition^{prescribed under the Central Tax} Notificati as well,

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Z. In view f the aforesaid submissions, it^{is clerarthat the EC issuedby the DGH is} qua the oods involved in present dispute and the^{same EC can be used for} complyi with the conditions both under the customs^{Notification and Central Tax} Notificati

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AA. In v of the above, the Ruling^{of the Ld. Authority should be modified} to suggest hat the EC^produced by the^{Appellant under which the benefit} of for

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concessi al customs duty is^{granted under Customs Notificatlonis sufficient} complia e with the condition^{prescribed under Central Tax Notificationand} the the

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drill bits d by the Appellant can be^{suppliedto 12 locationsof oNGC at} concess nal rate prescribed under the^{Central Tax Notification.}

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BB. In of the aforesaid, it is respectfully^{prayed that:}

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i. The i pugned Ruling issued by the Ld. Authority^{be modifiedto hold that the} appel t is entitled to concessional^{rate of tax based on Notification O3l2Ol7-} cT (R te) dated 28.06,2017^{and correspondingStateGST notification,based} ona ngle Essentiality Certificate^{producedat the time of import of goods; and}

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ii. Grant a personal hearing and^permit the^{Appellantto produceadditional} documents and other materials at the time of^{personal hearing.}

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iii.For such further and other reliefs as this Hon'ble Appellate Authority may^deem fit in the facts and circumstances of the case.

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3. Personal Hearing:

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The proceedings of Hearing were conducted through video conference on 23'd September 2020, for which the authorized representative, Sri Prasad Paranjape, Advocate attended and made additional submissions as under:

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4. Additional submissions:

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Facts:

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The appellant is a company incorporated under the laws of Cayman^{Islands and} operates in India as a project office. As part of its tndia Operations, the Appellant has also set up a unit in the State of Andhra Pradesh, which is registered under^the GST law.

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The appellant secured a contract bearing no.8040000039^dated 20^{May 2015} from Oil & Natural Gas Corporation L-td^("ONGC"') to supply drill bits on consignment basis i.e., Sale on approval basis to ONGC's 12 different locations^{based on call *out} order received from ONGC.

¶118

Since the goods to be supplied by the appellant are to^{be used in petroleum} operations undertaken under Petroleum Exploratir:n^Licenses or^miningleases granted by the Government to ONGC, the goods are entitled for exemption^(reduced rate of tax) under the Customs and GST laws.

¶119

One of the conditions to^qualify for such exemption^{under both} -^{Customs and} GST laws, i$ to produce an Essentiality Certificate^{("EC") issued by the Director} General of Hydrocarbon^('DGH"). The conditions^{of the exemption, including that of} the EC are identical in Customs and GST laws.^The said^{EC is issued on an} application or recommendation made by^{ONGC. The said EC is consignmentspecific} and specifies the details of each consignment,^{including Purchase ordernumber,} Operator's name, importer's name, CIF value, Invoice^{number, blocks (i.e. place of} use), description of^{goods, quantity,} mining^{leasedetails.}

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S. The objective of mentioning all these details is^{to ensure that the goods are} tracked right from entry into India till^{its intended use in petroleum operations and} are not diverted elsewhere. In other^{words, it is implicit while granting the EC that} the goods will be used ln specified^{petroleum operations as mentioned in the EC. in} practice, DGH issues only one EC^per consignment.

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6, With the above background and^{being aggrieved by the Impugned Order,} specifically with respect to^{question(b) at para 2 above, the Appellant is before this} Hon'ble Appellate Authority^{of Advance Ruling.}

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¶123

The reiterates the submissions made in the appeal memorandum. 2. As can b seen from the whole scheme of things, i.e. exemption notifications, EC lssued that re import is allowed only for the^purpose of consequent^{supply to ONGC} for the of use in specified operations. The^goods cannot be^put to any^other use without eeking necessary^permissions and^payment of^taxes. 3. Unlike, the case of any other transaction, the import and^{subsequent supplyof} impugned g viz. drill bits, is inextricably linked till the^goods are ultimately^put to its inten d purpose. It can be seen from the EC issued by^DGH that it^certifies that the being imported are required for^petroleum operations^{of execution of} projects un r Petroleum Exploration Licenses or Mining Leases^{granted by the} Governme to ONGC. This certification is^givenqua the^{goods and EC is given} clearly ide ifying the goods for which exemption is^given. It is^also a^practice followed by to issue only one EC per consignment. 4. Section 1(1) of the CGST Act under which the relevant^{exemption is granted} authorises e government to^grant exemption, either^{absolutelyor subject to} conditions, r'goods of any specified description'.^{Notification No.3/2017-CT (Rate)} dated 28. .20L7 therefore exempts'9oods of^{given description',subject to} specified ditions. Thus, it is clear that the exernption^{can be granted qua the} goods not person. Since the conditions in Customs exemption^{notification and} GST notific tion are identlcally worded, it^{is submittedthat the EC obtained for} Customs uld suffice for the^purpose of^{GST notificationalso.} 5. As alrea submitted, the Appellant imports the^{goodsonly for the purpose of} supplying t ONGC. The EC is issued on the application /^{recommendation of ONGC.} The said E clearly identifies the goods for which the exemption is^{granted with} added obl ion of specified use. The condition of specified use^{and obtaining} certificate this effect is a common condition under the customs^{and the GST law.} Thus, when the exemption is attached to the Eoods^{and once, for the purpose of} Customs law, it is established that the^goods are eligible^{for exemption, thus the} very same goods when put to very same use in another but^{continuing limb of the} transaction, should be eligible for exemption on the basis of^{same EC without} insisting on a separate EC, especially since DGH follows the^practice of^{issuingsingle} EC per consignment. The Appellant cannot be^prul to detriment^{for the thlngs which} are beyond their control.

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Without prejudice it is submitted that the^purport and the^{objective of the} Notification No. 5O/2O17-Cus. issued under the Customs^Act and^{the Notification No.} 3/20L7-CT (Rate) issued under the CGST Act and other^{correspondingNotifications} issued under the IGST Act and the APGST Act^is; the same^{i.e. to permitthe import/} subsequent supply of goods for^petroleum operations at^{concessionalrate with an} objective of reduction in fuel exploration costs^{and making the fuel availableto} general public at a reduced price.

¶125

¶126

The Ld. R is right in holding in its answer^{to question(a) framed before it that} the transacti of import and subsequent supply^{are two distinct transactiOnsi.e.} distinct sup lies as^prescribed under the Customs/^{GST Acts. However,itis} undeniable they still continue to form an inextricable link between^{each other.} The t are coterminous.

¶127

It is sub that both the supplies are arising out of a single^{contractawarded} to the Appel ant by ONGC. It is a fact on record that the execution^{of contract of} providing dri Ing services to ONGC has occasioned the import^{of drill bits into India} and its sub uent supply to ONGC for usage during^{providingof servicesto ONGC} is in conti on of the import activity.

¶128

It is also while to note that both the notifications do^{not require EC to be} addressed any entity or require it to be obtained^{by any specific person.The} relevant ition is to produce the EC before a^particular officer^{certifying the} specific^goo for the specific use. So long as the EC certifies the^{intended use as} envisaged u der the GST notification, the other details on^{the EC should not comein} way to disal the benefit of the GST exemption notification. 1O. In th circumstances, the Certificate available on^record which certifies the specified u of the goods should be sufficient compliance of^the r Notification under the GST law

¶129

As sub itted earlier, both the transactions viz. import and^{local supplyare} inextricably inked. If the GST Authorities were to refuse accepting^{the EC produced} before the Customs authorities when admittedly the^conditlons of^{both the} notification re the same, it will amount to GST zruthorities taking^{different view than} the Custom in respect of same goods, in same transaction-chain and^for the^same use of the . It is settled position in law that when one Government^Authority has accept the compliance of the Appellant, it is not open^{for the other} Governmen Authority to deny the same. For thls, the Appellant^{relies on the} judgment case of Commissioner of Income-Tax vs. Anandha^Metal Corpora 2oo4 SCC on Line Mad 9s2[(2o0s) 273ITR 262].

¶130

Once Customs EC carries the same certlfication that is^{needed to claim} exemption der the GST law, insistence of separate^EC for^{GST exemptionpurpose} is futile and warranted in law. It is settled position in law that once^{the Appellant} has de that the goods In question are entitled for^{exemption,then merely} based on template of the EC, exemption cannot be denied.^{Once the Appellant} establishes heir eligibility to the exemption, then the other conditions^{of the} notification to be liberally interpreted. In the^present case,^{therefore, once it is} admitted the condition under the Customs Act^{and the GST law are the same,} and the lant is granted valid exemption under the Customs^{law, the GST} Authorities hould not insist on separate EC for GST^{purpose. For this, the Appellant} relies on

¶131

a. Ob um Electrical Industries Pvt. Ltd. Vs. Collector^{of Customs, Bom. L997} (e4 ELT 449 (SC). b. missioner of Income Tax, Amritsar vs. Straw^{Board ManufacturingCo.}

¶132

¶133

;{1

¶134

., 1989 Supp (2) SCC 523 = AIR 1989 SC 14901.

¶135

sraj Gordhandas vs. H.H. Dave, Assistant collector of central Excise surat and others, (1969) 2 scR 253 = AIR 1970 sc 755.

¶136

lector of Customs vs. Bharat Heavy Electricals Ltd., 1992 (61) ELT 332

¶137

(

¶138

e. Co missioner of customs, Import (Mumbai) Vs. Tullow India operations L ., 200s (189) ELT 401 (SC).

¶139

¶140

The llant has not disputed the Ruling to the extent that the transaction of import and subsequent supply to ONGC are two distinct transactions i.e. distinct supplies as prescribed under the customs / GST Acts. Thus the decision of the impugned with regard to the import of drill bits for supply to oNGC at its location in ia on consumption basis invorves two supplies namely, Import into India of dri bits; and Indigenous movement from the port of import to oNGC,s location is

¶141

ain contention on behalf of the appellant is that the case fell within the language of e two notifications, one for import of drill bits into India under serial no. 404 of otification No. 50/2017-customs, dated 30 June 2ol7 and another for indigenous ment under Notification No. 3/2017-central Tax (Rate), dated 28 June 20 7 under the IGST/CGST Acts respectively. There is no requirement to obtain Two separate Essentiality Certificates from the same Authority i.e., Director Geneial of ydrocarbons one at the time of import and another for Interstate; ,i'#;; State supp of the same under the GST L.rws, to entitle him for claiming exemption/ ion rate of Tax under both the enactments.

¶142

llant relied on several judgements of the Honourable courts in support of h contention. The Judgements relied by the appellant are different from the present :ase' The appellant relied on the jr-rdgements related to Classification, inclusion/ex usion of goods under Excise Tariff manual and applicability of exemption fications, to the similar line of trade, etc., under the customs and Excise Tariff enactments of the Central Government. The present issue relates to requirement of Essentiality certificate for cliaiming concessional rate of Tax /exemption nder different rax Authorities for distinct and different supplies involved i.e. at the time of import under customs and another during the course of local sa pply under Central and state enactments. In the case f rnnamuri Gopalan v. state of Andhra pradesh, [1963] 2 scR the Hono e supreme court held that the State was "possibly right in the submission t at the object behind the framers of the notification was to avoid double taxation but e operation of an enactment or of a notification has to be judged not by the obj which the legislature or the notifylng authority, as the case may be, may have h I in mind but by the words which it has employed to effectuate the legislative i nt"

¶143

¶144

The same was reaffirmed in the case Hansraj Gordhandas v, H.H. Dave & Ors [196e]^{2 SCR 260}

¶145

".....-But, the Operation of the notifications had to be judged not by the object which the rule making authority had in mind but by the words which it had employed to effectuate the legislative intent."

¶146

In view of the above discussions, it is concluded t.hat The Essentiality certificates prescribed under the said two notifications have to be furnished separately to avail the benefit of the said notifications.

¶147

Thus the order is issued.

¶148

ORDER

¶149

We do not fiftd any reason to interfere with the ruling pronounced by the Authority for Advancel ruling vide their order No. AAR No.O7lAP / cST l2O2O dated 25.O2.2O2O lAuthority for Advance Ruling, Andhra Pradesh.

¶150

S(/- neeyush Kumar Chief pommissioner (State Tax) Member

¶151

Sd/- Naresh Penumaka Chief Commissioner (Central Tax) Member //t.c.f^.b.o// Wtu Deputy CommisEioner (ST) DEPUW COMMlssloNER^(SO Olr. Chief Commissirnr^{ol Strtc Tar'} \ft2,/^{crurrnmentcl A'P" ViiaYawrda}

¶152

¶153

t) M/s. Halliburton Offshore Services Inc.(Drill Bits), Plot No.5A3, Unit-2, ADB Road, Vakalpudi, East Godavari District, Pin.No.533004 (Andhra Pradesh) (By Registered post)

¶154

1. M/s. Halliburton Offshore Services Inc.(Drill Bits), International Business Park, l-7th Floor, Connmerz II, oberoi Garden city, off western Express Highway, Goregaon (East), Mumbai-400063 Maharashtra State (By Registered post)

¶155

Copy to

¶156

The Assistant Commissioner of State Tax, Kakinada Circle, Kakinada Division. (By Registered Post)

¶157

The Superintendent of Central Tax, Ramanayyapeta Range, Kakinada CGST Division. (By Registered Post)

¶158

Copy submitted to

¶159

The Chief Commissioner (State Tax), O/o Chief Commissioner of State Tax, Eedupugallu, Vijayawada

¶160

The Chief Commissioner (Central Tax), O/o Chief Commissioner of Central tax & customs, Visakhapatnam zone, GST Bhav,an, Port area, Visakhapatnam530035. (By Registered Post)

AAAR/AP/05(GST)/2020 of M/s Halliburton Offshore Services Inc. (Drill Bits)

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AAAR/AP/05(GST)/2020 of M/s Halliburton Offshore Services Inc. (Drill Bits)

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