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2023 (1) TMI 909 - HC - CustomsJurisdiction of Customs Officers for seizure or recovery of material in a search carried out in a DTA - Smuggling - Clandestine movement of gold - search and seizure proceedings - HELD THAT - Section 21 of SEZ Act deals with the notified offence or offence occasioning in an SEZ. The circumstances stated in the show cause notice are accepted as true and correct; it cannot be said that the subject violations happened in SEZ and were terminated in SEZ. Therefore, only the authorities under the SEZ Act have jurisdiction to act against the importer. In a situation as the present, this Court is of the view that for alleged unauthorized movement of goods/gold, the Development Commissioner etc., would have jurisdiction on the establishment and continuance of a unit in an SEZ and for importing goods/gold into DTA without paying customs duty, the Customs Department have jurisdiction on the information gathered in a DTA in the search carried by them. The CESTAT reasons that when two interpretations are possible, the interpretation favourable to a taxpayer must be accepted is entirely out of context. Jurisdiction, in fact, or law, irrespective of the nature of the enactment, has different manifestations. In the case on hand, the search and seizure have occasioned in DTA. Therefore, the Officers of the Customs Department, vis- -vis the alleged illegality noted against both the importer and the individuals who handled the gold moved out of SEZ, have jurisdiction under Act 1962. The denial of jurisdiction to the Officers of the Customs Department for offences or violations noticed in DTA would enhance the area of an SEZ and diminish the jurisdiction of the Act 1962. There are two aspects for independent and objective consideration search and seizure in DTA and, conversely, an investigation into commissions or omissions in an SEZ. The circumstance is that 4 Kg of gold was imported by the AGPL/importer when it had authorization and permission. The imported gold was lying in an uncleared area at the Air Cargo Complex at Nedumbassery, Cochin Airport. Stock, goods or gold lying in an uncleared area cannot be confiscated on the ground that upon completion of import, the said goods could also be used for a purpose otherwise provided for by law - the Order-in-Original, in anticipation of the 4 Kg of gold being misused or moved out of CSEZ, has been confiscated. It is considered that the reasoning of the CESTAT, insofar as 4 kg gold is concerned, is contextual, correct and tenable. Hence, to this limited extent, the said finding does not warrant interference. Application disposed off.
Issues Involved:
1. Legality and correctness of the orders by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) and the competent authorities under the SEZ Act. 2. Jurisdiction of the Customs Department versus the SEZ authorities. 3. Confiscation and penalties related to the unauthorized movement of gold. 4. Implementation of the CESTAT order regarding the release of 4 kg of gold. 5. Appeals against penalties and cancellation of authorization under the SEZ Act. Detailed Analysis: 1. Legality and Correctness of Orders: The judgment addresses the legality and correctness of the order dated 17.02.2022 by CESTAT and the orders dated 27.03.2015, 07.09.2018, and 19.06.2020 by the competent authorities under the SEZ Act. The court examines whether the actions taken by the Customs Department and SEZ authorities were within their jurisdiction and if the penalties and confiscations imposed were justified. 2. Jurisdiction of Customs Department vs. SEZ Authorities: The core issue is whether the Customs Department had jurisdiction over the offenses related to the movement of gold from the SEZ to the Domestic Tariff Area (DTA). The court finds that the Customs Department has jurisdiction over offenses detected in the DTA, even if the goods originated from the SEZ. The SEZ authorities have jurisdiction within the SEZ, but once the goods move to the DTA without authorization, the Customs Department can enforce penalties and confiscations under the Customs Act, 1962. 3. Confiscation and Penalties: The court reviews the confiscation of gold and penalties imposed by the Customs Department. The initial order-in-original had confiscated various quantities of gold found in the DTA and imposed penalties on the importer and related parties. The CESTAT had reversed this order, citing lack of jurisdiction by the Customs Department. However, the High Court finds that the Customs Department did have jurisdiction and that the CESTAT's reversal was unsustainable. The court reinstates the confiscations and penalties imposed by the Customs Department, except for the 4 kg of gold still lying at the Air Cargo Complex. 4. Implementation of CESTAT Order regarding 4 kg of Gold: The court addresses the CESTAT's order to release the 4 kg of gold lying at the Air Cargo Complex, Nedumbassery. The CESTAT had found that the confiscation of this gold was premature and based on assumptions. The High Court agrees with this finding, stating that the gold was imported with proper authorization and was still in an uncleared area. The court directs the Customs Department to release the 4 kg of gold upon the importer filing a Bill of Entry and paying the applicable duty. 5. Appeals Against Penalties and Cancellation under SEZ Act: The judgment also covers the appeals filed by the importer against penalties and the cancellation of their authorization under the SEZ Act. The Development Commissioner had imposed penalties and cancelled the importer's authorization for violating SEZ regulations. The appellate authority upheld these penalties. The High Court, however, finds that the importer was not given a fair opportunity to present their case and remits the matter back to the appellate authority for reconsideration. Conclusion: The High Court sets aside the CESTAT's finding that denied the Customs Department's jurisdiction and reinstates the order-in-original, except for the confiscation of the 4 kg of gold at the Air Cargo Complex. The court directs the Customs Department to release the 4 kg of gold upon compliance with procedural requirements by the importer. The penalties and cancellation under the SEZ Act are remitted back to the appellate authority for a fresh decision.
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