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2008 (7) TMI 221 - HC - CustomsDemand of export duty on supplies from DTA to SEZ - in absence of any specific provision under the SEZ Act, to levy customs duty or in absence of any corresponding amendment in the Customs Act, the petitioners are not liable to pay customs duty on the goods supplied from a DTA to SEZ Unit or on removal of goods from any place in India i.e. outside a SEZ to a SEZ in India since petitioners have been furnishing Bank Guarantee and/or executing bond, ad-interim relief was granted
Issues involved:
1. Maintainability of the petitions under Article 226 of the Constitution of India. 2. Granting of ad-interim relief against the levy of export duty for supplies of Iron Ore Pellets to a Special Economic Zone. 3. Interpretation of provisions under the Special Economic Zones Act, 2005 and the Customs Act, 1962. 4. Legal basis for imposing customs duty on goods supplied to a Special Economic Zone. 5. Precedents and legal arguments regarding the imposition of customs duty on goods supplied within India. Issue 1: Maintainability of the petitions under Article 226 of the Constitution of India: The respondents argued that the petitions were not maintainable under Article 226 of the Constitution of India as the supply of goods from a Domestic Tariff Area to a Unit in the Special Economic Zone attracts levy of customs duty specified in the Export Tariff. This argument was based on the provisions of the Special Economic Zones Act, 2005 and Section 51 of the Act, which gives an overriding effect to the Act. Issue 2: Granting of ad-interim relief against the levy of export duty: The petitioners sought ad-interim relief against the levy of export duty for supplies of Iron Ore Pellets to a Special Economic Zone. The Court granted ad-interim relief until 01.08.2008, considering the absence of specific provisions under the SEZ Act to levy customs duty and the continuation of the arrangement by the authorities until 30.06.2008. Issue 3: Interpretation of provisions under the SEZ Act and the Customs Act: The Senior Counsels for the petitioners argued that there is no provision under the SEZ Act to levy customs duty and that the duty under the Customs Act is not leviable on goods moved within India, citing relevant definitions and provisions from both Acts. Issue 4: Legal basis for imposing customs duty on goods supplied to a Special Economic Zone: The respondents contended that the levy of customs duty on goods supplied from a Domestic Tariff Area to a Unit in the Special Economic Zone is justified under the Customs Act, emphasizing the provisions of the Act and the Export Tariff. Issue 5: Precedents and legal arguments regarding customs duty imposition: The petitioners relied on legal precedents and argued that the duty is not leviable on goods supplied within India, challenging the imposition of customs duty on goods moved from one place to another within the country. They also referred to a similar case before the Madras High Court where interim relief was granted against levying customs duties on goods moved within India. The petitioners emphasized their willingness to continue arrangements like Bank Guarantee until the matter is finally heard by the Court. In conclusion, the Court admitted both petitions and granted ad-interim relief until 01.08.2008, considering the absence of specific provisions under the SEZ Act for levying customs duty and the willingness of the petitioners to comply with necessary arrangements. The Court highlighted the need for further examination of the issue regarding the imposition of customs duty on goods supplied within India to a Special Economic Zone.
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