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2022 (2) TMI 746 - AT - CustomsJurisdiction - scope of the subject offence was not limited to the one within SEZ but also an offence of smuggling dutiable goods from a territory outside India into the Indian Customs territory - whether the authorities under the Customs Act enjoy jurisdiction over SEZ units? - HELD THAT - In the cases of M/S MEENAKSHI INTERNATIONAL VERSUS CC (I G) , NEW DELHI 2016 (11) TMI 851 - CESTAT NEW DELHI , either co-ordinate division benches or single members of this Tribunal have consistently held that the authorities under the Customs Act do not enjoy such jurisdiction. The only discordant note has been struck by a Division Bench in SHRI JATIN ARORA VERSUS C.C., NEW DELHI 2017 (11) TMI 1119 - CESTAT NEW DELHI . We are not required to reconcile between these orders of this Tribunal as there is, already available to us, guidance from a High Court on this question. We are required, therefore, to reconcile between two decisions of the Hon ble Gujarat High Court in BHARTI J. GANDHI VERSUS UNION OF INDIA 2009 (12) TMI 439 - GUJARAT HIGH COURT and UNION OF INDIA VERSUS OSWAL AGRICOMM PVT. LTD. 2010 (7) TMI 712 - GUJARAT HIGH COURT . Whereas Bharti Gandhi holds that authorities under the Customs Act do not enjoy jurisdiction over SEZ units, Oswal Agricomm reaches the opposite conclusion, but without referring to its own earlier decision in Bharti s case. In any case and in our opinion, it is not for us to weigh the relative merits of the reasoning adopted by these two judgements, both being rendered by a High Court, to which we must defer. The benefit of the interpretations, drawn consistently by various Benches, are in favour of the tax payer/ appellants herein, in these batch of cases, including the decision of the Hon ble Gujarat High Court in Bharti Gandhi s case which, both parties before us agree, has attained finality. The impugned order and the demands and penalties raised therein, against all the appellants are set aside - Admittedly, there is a permission letter placed on record permitting the appellant in Customs Appeal No. 21358 of 2016 viz. M/s. Ashwin Gold Pvt. Ltd. for outsourcing 50 kgs. of gold to one of its units in DTA. The alleged difference is of about 49 kgs. Hence, if telescoping of the above 50 kgs. is given, then there may not be any shortage. But, the Adjudicating Authority has ignored this aspect completely, which appears to be incorrect - appeal allowed.
Issues Involved:
1. Confiscation of 4 kgs. of gold lying at the Air Cargo Complex, Nedumbassery. 2. Jurisdiction of Customs authorities over SEZ units. 3. Allegations of smuggling and violations of SEZ rules by AGPL. 4. Confiscation of gold and gold ornaments from various entities and individuals. 5. Imposition of penalties on various individuals and entities. Detailed Analysis: Confiscation of 4 kgs. of Gold: The Tribunal examined the confiscation of 4 kgs. of gold lying at the Air Cargo Complex, Nedumbassery. The impugned order stated that AGPL lacked the necessary documents for a genuine transaction and had removed essential machinery from its SEZ unit, leading to the presumption that the gold was intended for clandestine removal to the Domestic Tariff Area (DTA). The Tribunal found this assumption premature and unsupported by evidence. It noted that AGPL had the necessary authorization to import gold at the time of import, and the SEZ authority had not canceled its license. Therefore, the confiscation of 4 kgs. of gold was deemed unsustainable and set aside. Jurisdiction of Customs Authorities: The appellants challenged the jurisdiction of the Customs authorities, arguing that the SEZ Act is a complete code by itself, and violations within SEZ should be handled by SEZ authorities, not Customs authorities. The Tribunal considered various precedents, including decisions from the Gujarat High Court and CESTAT, which consistently held that Customs authorities do not have jurisdiction over SEZ units. The Tribunal concluded that the Customs authorities lacked jurisdiction in this case, and the impugned order was set aside on this ground alone. Allegations of Smuggling and Violations of SEZ Rules: The show-cause notice alleged that AGPL had violated SEZ rules and smuggled gold into the Indian Customs territory. It was claimed that AGPL imported 385,512.5 grams of gold bars and exported 336,727.464 grams, resulting in a shortage of 48,785.036 grams. Statements recorded under Section 108 of the Customs Act indicated that the Managing Director of AGPL, Sanjay Subrao Nikam, had smuggled the missing gold. However, the Tribunal found inconsistencies in the statements and noted that the Commissioner had acted prematurely based on assumptions. Consequently, the Tribunal did not delve into the merits of these allegations, as the lack of jurisdiction rendered them inconsequential. Confiscation of Gold and Gold Ornaments: The Tribunal addressed the confiscation of gold and gold ornaments from various entities, including M/s. Kallarakkal Jewellery, M/s. Smijo Gold, M/s. Southern Gold Pvt. Ltd., M/s. Ajay & Co., and M/s. Leo’s Angel Gold. The show-cause notice proposed confiscation under various sections of the Customs Act. However, given the Tribunal's finding on the lack of jurisdiction, these confiscations were also set aside. Imposition of Penalties: Penalties were proposed under Sections 112(a), 112(b), and 114A of the Customs Act against various individuals and entities, including the Managing Director of AGPL and other associated persons. The Tribunal did not address the merits of these penalties, as the lack of jurisdiction over SEZ units rendered the penalties unsustainable. Consequently, all penalties were set aside. Conclusion: The Tribunal set aside the impugned order, including the confiscation of gold and gold ornaments and the imposition of penalties, primarily on the ground that the Customs authorities lacked jurisdiction over SEZ units. The Tribunal emphasized the importance of adhering to the principles of natural justice, rule of law, and fair trial, and found that the actions of the Customs authorities were premature and based on assumptions. The appeals were allowed with consequential reliefs, if any, as per law.
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