The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has partly allowed the appeal filed by Shipping Corporation of India Ltd, holding that a certificate issued by Hindustan Petroleum Corporation Ltd is sufficient evidence to establish the duty-paid nature of bunker fuel supplied to a vessel, by setting aside the demand of duty and interest on a portion of diesel oil.
The bench of Dr. Ajaya Krishna Vishvesha (Judicial Member) has observed that the rejection of the HPCL certificate by the Commissioner (Appeals) was not supported by cogent reasoning. The Bench held that once the supplier itself certifies the duty-paid character of the goods, such evidence cannot be discarded merely on the ground that no additional corroborative documents were produced.
The dispute arose from the conversion of the vessel MT Arun Khetar Pal from foreign run to coastal run in April 2008, when the appellant filed a Bill of Entry declaring bunkers, stores, and provisions. The department had initiated proceedings on the ground that the appellant failed to establish that certain quantities of High-Speed Diesel (HSD) were duty paid, resulting in a demand along with interest under the Customs Act.
During adjudication, the original authority dropped a substantial demand of over ₹31 lakh but confirmed duty of ₹3.54 lakh with interest. However, on appeal by the department, the Commissioner (Appeals) held that a quantity of 49.431 MT of diesel supplied after the vessel’s conversion to foreign run was not proven to be duty paid and accordingly upheld the demand on that portion.
Before the Tribunal, the appellant contended that the Commissioner (Appeals) had erred in rejecting a certificate dated 17 September 2010 issued by HPCL, which confirmed that the bunkers supplied under the relevant Bunker Delivery Notes were duty paid. It was argued that HPCL, being both the charterer and the supplier of the bunkers, was a competent authority to certify the nature of the fuel supplied.
The Tribunal further noted that even though foreign-going vessels are eligible to receive duty-free bunkers, this does not preclude the possibility of duty-paid supplies. Therefore, the certificate issued by HPCL, being the actual supplier and charterer, carried significant evidentiary value and ought to have been relied upon.
Accordingly, the Tribunal held that the 49.431 MT of diesel supplied on 13 March 2008 must be treated as duty paid, and no duty or interest could be demanded on this quantity.
However, the Tribunal upheld the remaining findings of the Commissioner (Appeals), resulting in a partial allowance of the appeal and modification of the impugned order.
Case Details
Case Title: The Shipping Corporation Of India Ltd Versus Commissioner Of Customs-Jamnagar(Prev)
Citation: JURISHOUR-1047-CES-2026(AHM)Â
Case No.: CUSTOMS APPEAL NO. 95 OF 2011
Date: 28.04.2026
Counsel For Appellant: Bhagyodaya Mishra, Advocate
Counsel For Respondent: Sunita Menon, Superintendent (AR)
