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2014 (9) TMI 985 - AT - CustomsMis-declaration of goods Goods found in SKD condition Both appellants-units were located in SEZ and have LOP issued by Development Commissioner for manufacture of consumer electronic goods for export Both units imported consignments declared to be containing Chinese Mobile Phones in SKD condition Both consignments were examined by preventive officers and out of total sets only some pieces of mobile phones were found in SKD condition Only mis-declaration alleged is that while in both cases consignments were declared to be of mobile phones in SKD condition on examination bulk of quantity were found to be in fully assembled condition Therefore confiscation redemption fines and penalty was imposed Held that - appellant contented that even sets which were found in assembled condition were to be subjected to certain further processes like feeding IMEI number checking bluetooth checking and adjusting parameters of phones etc. before same could be exported and these processes amount to manufacture in terms of definition of manufacture in SEZ Act Also in terms of Section 53(1) of SEZ Act 2005 SEZ is deemed to be territory outside Customs Territory of India and goods imported were meant for unit in SEZ Noida Commissioner had no jurisdiction to confiscate these goods and impose penalty on appellant and it is only Joint Commissioner who had jurisdiction to take necessary action Therefore impugned orders are not sustainable Decided in favour of appellant.
Issues:
1. Misdeclaration of imported goods in Special Economic Zone (SEZ) 2. Jurisdiction of Customs officers in SEZ cases 3. Confiscation, redemption fine, and penalty imposition Analysis: Issue 1: Misdeclaration of imported goods in SEZ The case involved two appellants, Morgan Tectronics Ltd. and M/s. Pertech Exports Pvt. Ltd., who imported consignments of Chinese Mobile Phones in SKD condition to be used for manufacturing consumer electronic goods for export. Customs officers found discrepancies in the declared SKD condition of the goods upon examination, with a significant portion found in fully finished condition. The Commissioner imposed penalties and ordered confiscation based on misdeclaration. However, the appellants argued that the goods were to undergo further manufacturing processes, which qualify as 'manufacture' under the SEZ Act. The Tribunal agreed that misdeclaration was not proven to evade customs duty, especially since no duty was levied on SEZ imports. Therefore, the confiscation, redemption fine, and penalty were deemed unjustified. Issue 2: Jurisdiction of Customs officers in SEZ cases The appellants contended that the SEZ Act and Rules govern importation and processing of goods in SEZs, designating specified officers for Customs functions within SEZs. They argued that the Commissioner of Customs in New Delhi lacked jurisdiction over SEZ goods, as per the SEZ Act, which deems SEZ as outside the Customs Territory of India. The Tribunal concurred, stating that only the Joint/Dy. Commissioner/Asstt. Commissioner of Customs in the Noida SEZ unit had the authority to take action regarding the imported goods. Consequently, the Commissioner's orders were deemed unsustainable due to lack of jurisdiction. Issue 3: Confiscation, redemption fine, and penalty imposition The Tribunal found that since the goods were imported by SEZ units and no customs duty was applicable, there was no basis for confiscation, redemption fine, or penalty imposition. The Commissioner's decision to confiscate the goods and impose penalties was overturned due to the absence of duty liability on SEZ imports. The Tribunal emphasized that the SEZ's unique status as outside the Customs Territory of India necessitated adherence to SEZ-specific regulations, rendering the Commissioner's actions invalid. In conclusion, the Tribunal set aside the impugned orders, allowing the appeals of the appellants based on the lack of misdeclaration intent for duty evasion, the absence of jurisdiction of the Commissioner over SEZ goods, and the inapplicability of confiscation, redemption fine, and penalties in SEZ import cases.
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