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2019 (6) TMI 1546 - HC - CustomsLevy of Customs Duty - electricity removed from SEZ to DTA or non-processing areas of SEZ - Validity of Notification No. 25/2010-Cus., dated 27-2-2010 as well as Notification No. 21/2002-Cus., dated 1-3-2002 - HELD THAT - The Division Bench did not deem it fit to correct the judgment in the manner suggested, and to grant the wider relief that had been prayed for in the petition but restricted the period to 26-6-2009 to 15-9-2010. The petitioners have thereafter thought it fit to accept the decision as it is, and did not file any review application, nor did they challenge the decision to the extent the relief prayed for has not been granted. Therefore, though the Court had discussed various issues and given findings thereon in the body of the judgment, it did not think it fit to grant any consequential relief, which appears to be a conscious decision as the Court has not entertained the Note for Speaking to the Minutes filed by the petitioners pointing out this fact. The Division Bench, in the earlier decision has consciously restricted the relief granted to the petitioners to the period from 26-6-2009 to 15-9-2010 for the reason that while holding in favour of the petitioners the Division Bench (in paragraph 23 of the judgment) was of the view that the provisions of Rule 47(3) of the SEZ Rules are designed to align the power plants located within SEZ to be at par with power plants located outside SEZ, both being located within India. Just as MPP imports or procures capital goods without payment of duty, but pays customs duty or excise duty, on the raw material and consumables used to generate electricity so also MPP located within SEZ imports or procures capital goods without payment of duty on raw materials and consumables to the extent the electricity generated by it is removed/supplied/sold outside SEZ. With effect from 6-9-2010, the petitioners were no longer liable to pay duty on raw materials and inputs. Therefore, if the petitioners do not pay the duty to the extent specified in the Notification No. 91/2010, dated 6-9-2010 and subsequent notifications, the petitioners would be enjoying double benefits of not paying duty on raw materials and inputs and also not paying any customs duty on removal of electricity from the SEZ to DTA. It appears that therefore, the Division Bench has restricted the relief to the period up till 6-9-2010, as granting relief beyond that period would amount to entitling the petitioners to double benefit of exemption from payment of duty on raw materials and inputs and exemption from payment of customs duty. Notification No. 9/2016-Cus., dated 16-2-2016 - HELD THAT - The said notification stands on a different footing than the other notifications. In this notification, there is no general exemption in respect of goods falling under Tariff Item 2716 00 00 of the First Schedule to the Customs Tariff Act, 1975 when imported into India from the whole of the duty of customs leviable thereon which is specified in the said First Schedule. Under this notification, different rates are provided for goods falling under Tariff Item 2716 00 00 and it is only in respect of electrical energy originating from Nepal and Bhutan that the standard rate (paisa per KWh) is nil. Thus, it is not as if import of electrical energy per se has been exempted from the whole of the customs duty leviable thereon. This notification is country specific and the petitioners cannot claim the benefit of exemption granted to import from those countries. The question of directing the appropriate authority to refund the amount collected on account of duty on electricity removed from SEZ to DTA does not arise - Petition dismissed.
Issues Involved:
1. Liability to pay customs duty under various notifications. 2. Applicability of previous court judgment to the current case. 3. Validity of subsequent notifications imposing customs duty. 4. Double taxation concerns. 5. Entitlement to refund of customs duty paid. Detailed Analysis: 1. Liability to Pay Customs Duty Under Various Notifications: The petitioners sought a declaration that they were not liable to pay customs duty under several notifications, including Notification No. 21/2002-Cus., dated 1-3-2002, Notification No. 91/2010-Cus., dated 6-9-2010, Notification No. 12/2012-Cus., dated 17-3-2012, and Notification No. 26/2012-Cus., dated 18-4-2012. They argued that these notifications were void ab initio based on a previous judgment dated 15-7-2015, which had declared certain notifications ultra vires. 2. Applicability of Previous Court Judgment to the Current Case: The petitioners relied on a previous judgment in Special Civil Application No. 3142 of 2010, which had set aside the proviso to Notification No. 25/2010-Cus., dated 27-2-2010, as being ultra vires Articles 14 and 265 of the Constitution of India. However, the court noted that the previous judgment granted limited relief for the period from 26-6-2009 to 15-9-2010 and did not extend to the other notifications or periods beyond this timeframe. 3. Validity of Subsequent Notifications Imposing Customs Duty: The court observed that subsequent notifications, including Notification No. 91/2010-Cus., dated 6-9-2010, and others, were not challenged in the previous petition. The court emphasized that without a direct challenge to these notifications, it could not grant declaratory relief based on the previous judgment. The court also noted that the petitioners did not challenge Notification No. 12/2012-Cus. and Notification No. 26/2012-Cus. during the pendency of the earlier petition. 4. Double Taxation Concerns: The petitioners argued that imposing customs duty on electricity removed from SEZ to DTA amounted to double taxation, as they were already paying duty on raw materials like coal. The court acknowledged this concern but noted that Instruction No. 67, dated 28th October 2010, had kept the operation of Rule 47(3) of the SEZ Rules in abeyance from 6-9-2010. Therefore, the petitioners were not liable to pay duty on raw materials and inputs post this date, mitigating the double taxation issue. 5. Entitlement to Refund of Customs Duty Paid: The petitioners sought a refund of customs duty paid on electricity removed from SEZ to DTA. However, the court held that since the declaratory relief was not granted, the question of refund did not arise. The court also dismissed the challenge to the letters dated 8-10-2015 and 16-11-2015, which demanded payment of customs duty. Conclusion: The court dismissed the petition, stating that the petitioners were not entitled to the declaratory relief or ancillary reliefs sought. The court emphasized that the previous judgment's limited relief could not be extended to subsequent periods or notifications without a direct challenge. The petitioners' arguments regarding double taxation and refund of customs duty were also rejected based on the court's interpretation of the relevant laws and instructions.
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