2011 (2) TMI 460 - HC - Central Excise

Special Economic Zones - the policy for setting up particular Special Economic Zones had been adopted by the Government with a view to provide an internationally competitive environment for export - The objectives of the Special Economic Zones includes making available to the unit goods and services free of taxes and duties for export production supported by integrated infrastructure - In line with the aforesaid objective of providing goods and services free of taxes and duties in the Special Economic Zone or to a developer for purpose of establishing an integrated infrastructure for export production provisions have been made in the Act granting exemption from taxes and duties which could otherwise have been leviable in the business of any production for exemption from such duty - Therefore the instructions issued by the department as rightly held by the learned Single Judge not only runs counter to the aforesaid policy but is without authority of law illegal and rightly set aside by the learned Single Judge - Accordingly appeals are dismissed.

Summary

Issues:
Challenge to order declaring no export duty payable for supply of goods from DTA to SEZ, legality of instructions issued, jurisdiction under SEZ Act vs. Customs Act, constitutional rights infringement, interpretation of fiscal legislation, object of SEZ Act, exemption from duties for SEZ units, validity of notifications, policy objectives of SEZ, legality of notifications, appeal dismissal.

Analysis:

1. Condonation of Delay in Filing Appeal:
- An appeal was filed seeking condonation of a 7-day delay, which was allowed based on the cause shown in the supporting affidavit. The delay was condoned, and the appeal was allowed.

2. Challenge to Order Regarding Export Duty:
- The revenue challenged an order declaring no export duty payable for goods supplied from DTA to SEZ. The Single Judge held the instructions issued as illegal, quashing all related proceedings. The judgment was based on the interpretation of the SEZ Act and Customs Act.

3. Interpretation of SEZ Act vs. Customs Act:
- The dispute revolved around whether the movement of goods from DTA to SEZ constituted an export under the SEZ Act or Customs Act. The Single Judge ruled that the levy of export duty did not fall under the SEZ Act but rather under the Customs law, rendering the notifications unconstitutional.

4. Constitutional Rights Infringement:
- The respondents argued that the instructions did not violate the petitioners' rights under Article 19(1)(g) of the Constitution. However, the Single Judge found that enforcing export duty under the SEZ Act provisions would be unconstitutional.

5. Interpretation of Fiscal Legislation:
- The judgment emphasized strict construction of fiscal statutes, highlighting that tax imposition cannot be implied. The absence of charging provisions under the SEZ Act for export duty led to the dismissal of the appeals.

6. Object of SEZ Act and Policy Objectives:
- The Act aimed at promoting exports, generating economic activity, and providing tax exemptions for SEZ units. The instructions issued were deemed to counteract the Act's objectives and policy goals, leading to their invalidation.

7. Exemption from Duties for SEZ Units:
- The Act provided for exemptions from taxes and duties for SEZ units to enhance export production. The notifications issued were found to contradict this provision and were rightfully set aside by the Single Judge.

8. Dismissal of Appeals and Stay Applications:
- The appeals challenging the Single Judge's order were dismissed on merits, along with the related stay applications, as the Court found no merit in the appeals. The decision upheld the Single Judge's ruling on the legality of export duty imposition.

This detailed analysis of the judgment showcases the key issues involved, the legal interpretations made by the Court, and the ultimate dismissal of the appeals challenging the order regarding export duty on goods supplied from DTA to SEZ.