2019 (12) TMI 794 - AT - Customs

Jurisdiction - SEZ unit / area - power of Custom Officer of search and seizure - Smuggling - import of gold for conversion into gold jewellery and export of the same - Revenue entertained a view that the said goods were attempted to be illegally smuggled out of the zone by the said employee and accordingly undertook further investigation - whether the Customs officer can search and seize the goods from a person, who is located in the SEZ area as the legal authorized unit indulging in legal import of the goods? HELD THAT - The Tribunal in catina of judgments has held that Customs officers has no jurisdiction to deal with the matter in respect of units located in SEZ area and has no powers to issue the show cause notice. This was held by the Hon ble Gujarat High Court in the case of BHARTI J. GANDHI VERSUS UNION OF INDIA 2009 (12) TMI 439 - GUJARAT HIGH COURT - To the same effect the decision of this Bench in the case of M/S MORGAN TECTRONICS LTD. SHRI P.V. KHULLAR, DIRECTOR VERSUS COMMISSIONER OF CUSTOMS NOIDA CUSTOMS COMMISSIONERATE, NOIDA 2018 (10) TMI 1214 - CESTAT ALLAHABAD wherein after taking note of the Tribunal s earlier decision in the case of the same assessee s it was held that Customs Authorities have no jurisdiction to deal with gold imported by unit located in SEZ. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Jurisdiction of Customs officers in dealing with goods in Special Economic Zone (SEZ).

Analysis:
The judgment pertains to multiple appeals against the same impugned order involving a SEZ unit engaged in gold import for conversion into jewellery and export. The issue arose when an employee was caught near the SEZ exit gate with gold, leading to confiscation and penalties by the Revenue. The crux of the matter revolved around the jurisdiction of Customs officers to search and seize goods in SEZ areas. The Tribunal, citing precedents and SEZ Rules, highlighted that Customs officers lack jurisdiction over units in SEZ areas. Notably, the decision in Bharti J. Gandhi vs. Union of India and Morgan Tectronics Ltd. case emphasized the SEZ's deemed status outside India's Customs territory, limiting Customs officers' authority. The Tribunal reiterated that only officers under SEZ Rules have the mandate to assess goods imported by SEZ units, not Customs officials.

The legal issue focused on the interpretation of SEZ Rules and Customs Act provisions concerning the jurisdictional competence of Customs officers in SEZ areas. The Tribunal's analysis emphasized the statutory framework's significance in delineating the authority of Customs officers vis-à-vis SEZ units. By referencing specific cases and legal provisions, the judgment underscored the limitations on Customs officers' powers in dealing with goods imported by SEZ units. The Tribunal's decision to set aside the impugned orders and allow the appeals with consequential relief to the appellant was grounded in the clear demarcation of jurisdiction as per the SEZ Rules and relevant legal precedents.

In conclusion, the judgment by the Appellate Tribunal CESTAT ALLAHABAD addressed the critical issue of Customs officers' jurisdiction in SEZ areas concerning imported goods. By examining SEZ Rules, legal precedents, and Customs Act provisions, the Tribunal established the exclusive authority of officers under SEZ Rules to assess goods imported by SEZ units. The decision reaffirmed the SEZ's distinct status outside India's Customs territory, thereby restricting Customs officers' jurisdiction over such units. Consequently, the impugned orders were set aside, and the appeals were allowed, providing relief to the appellant based on the legal interpretation of jurisdictional boundaries within SEZ areas.