Customs demand Rs2.12cr duty for 2D on cassettes

Vol 6, PW 13 (28 Aug 02) Exploration & Production

IT'S NOT ALL good news for Tullow.

As we write the Irish company is mired in an ugly dispute with customs over some 2D from its Gujarat offshore block GK-OSJ-1. Last month, the zealous Central Excise Gold Appellate Tribunal in Mumbai demanded a Rs2.12cr bond and Rs50 lakh bank guarantee from Tullow before adjudicating a dispute over payment of customs duty.

Tullow was shocked. "This was a blatantly illegal order," reveals a source.

"It was passed without regard for the PSC." At issue are some lines of 2D seismic from 1999 that Tullow shot over GK-OSJ-1 and brought to India in cassette form - a perfectly normal activity carried out by most overseas explorers. Customs disagreed, and imposed an arbitrary import duty of Rs2.12cr.

Tullow appealed. In February this year, the Commissioner of Customs (imports) at Mumbai upheld the original decision to make Tullow pay.

Tullow, however, plans to fight the order. "Bringing cassettes with 2D seismic is not import," adds a source.

"Even if it is import the PSC exempts us from paying duties while carrying out exploration activities on the block. The customs department totally disregarded the PSC." In private Tullow believes it is caught in the crossfire of a battle between the customs department and the oil ministry.

"This kind of time-wasting is enough to deter any foreign oil company from investing in India," he said. "Customs are trying to increase revenue collections but it can't be at our cost."