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2023 (9) TMI 466 - AT - CustomsClearance of Capital goods from SEZ to DTA under EPCG - appellant not exited from Special Economic Zone - eligible for clearing the capital goods under the prevailing Export Promotion Capital Goods Scheme or not - Rule 74(4) of the SEZ Rules, 2006 - HELD THAT - Under the provisions in which SEZ Scheme operates, under Section 30 of the SEZ Act, 2005, terms of removal of goods from SEZ to DTA on payment of Customs duties on the rate of duty and tariff valuation on the date of removal has been provided. Further, under Rules made to carry out the provisions of SEZ Act, 2005 i.e. S.E.Z Rules, 2006, under Rule 34 there is a prescription available that goods admitted in SEZ shall be used only for approved operations i.e. which is permitted through LOP by the Unit Approval Committee under Rule 49(1) of the SEZ Rules, 2006. Capital goods are allowed to be removed in DTA after use in a Special Economic Zone on payment of duty and depreciated value counted from the date commencement of production Rule 74 (4) SEZ rule, 2006. When the legislature has made a special provision by mentioning a particular export promotion Scheme to be availed only at the time of exit, same cannot be allowed to be freely availed at any time under a provision in which there is no prescription of capital goods to be cleared under EPCG Scheme is available. In this context, we are fortified in interpreting the provision of statute by the trite law that when a method has been laid down, it necessarily prohibits the doing of the act in any other manner than that which has been prescribed, and thus, the prohibition in other provision not being mentioned specifically will not apply. In the present instance, stipulation of one time availment of EPCG Scheme at the time of exit cannot be read as permitting availment of EPCG Scheme under Rule 34 of SEZ Rules, 2006. Particularly under expression on license appearing in that Rule. Further the Export Promotion schemes since 1994 after existence of W.T.O are being made by member countries as compliant to the W.T.O provisions requiring no element of subsidy to be allowed even entering through procedural mechanism. Switchover thus from one scheme to another of capital goods needs to be construed strictly through specific mandate of the legislature and not liberally - E.P.C.G. till exit from SEZ unit is not available, nor has appellant produced any such mandate or opinion from administrative authorities like Dev. Commissioners approving such availment by customs - the order of Commissioner (Appeals) upheld. There are no merit in the appeal - appeal dismissed.
Issues Involved:
1. Eligibility of SEZ unit to clear capital goods under EPCG scheme without exiting SEZ. 2. Liability for customs duty and interest on clearance of capital goods from SEZ to DTA. 3. Validity of the Commissioner (Appeals) order being non-speaking and alleged violation of natural justice principles. Summary: Issue 1: Eligibility of SEZ Unit to Clear Capital Goods under EPCG Scheme without Exiting SEZ The appellant argued that SEZ law permits the sale of capital goods from SEZ to DTA under EPCG authorization, citing Section 30 of the SEZ Act and Rules 47, 48, and 49 of SEZ Rules. They contended that judicial decisions support the interpretation that exemptions available at the time of import should also apply to DTA clearances. They further argued that Rule 74 does not restrict EPCG benefits only to the time of exit from SEZ, and the DTA buyer can obtain EPCG authorization for indigenous procurement of capital goods. The Tribunal, however, held that Rule 74(4) of SEZ Rules explicitly allows EPCG benefits only at the time of exit from SEZ. Accepting the appellant's interpretation would render the specific provision of "one time option to exit" redundant. The Tribunal emphasized that statutory provisions must be interpreted to give effect to every word, following the principle "ut res magis valeat quam pereat." Issue 2: Liability for Customs Duty and Interest on Clearance of Capital Goods from SEZ to DTA The appellant argued that the duty liability lies with the DTA unit, which filed the Bill of Entry for home consumption, and has fulfilled its Export Obligation under the EPCG authorization. They contended that the SEZ unit should not be liable for duty as it operates as a separate entity from the DTA unit. Furthermore, they claimed that customs authorities cannot demand duty from the SEZ unit as the EPCG authorization was valid and not canceled by DGFT. The Tribunal found that the appellant violated the bond-cum-undertaking conditions under Rule 22 of SEZ Rules by clearing capital goods under EPCG without exiting SEZ or obtaining permission from the Development Commissioner. It held that the SEZ unit is liable for customs duty and interest, as Rule 34 requires duty payment on goods used for unauthorized purposes as if cleared for home consumption. Issue 3: Validity of Commissioner (Appeals) Order being Non-Speaking and Alleged Violation of Natural Justice Principles The appellant claimed that the Commissioner (Appeals) order was non-speaking, violating principles of natural justice, and did not address specific submissions made by the appellant. The Tribunal upheld the Commissioner (Appeals) order, finding that it correctly addressed the issues and interpreted the statutory provisions. It concluded that the appellant's arguments lacked merit and dismissed the appeal. Conclusion: The Tribunal dismissed the appeal, affirming that the SEZ unit is not eligible to clear capital goods under EPCG scheme without exiting SEZ, and is liable for customs duty and interest. The Commissioner (Appeals) order was found to be valid and correctly reasoned.
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