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2024 (8) TMI 1356 - AT - CustomsSmuggling into the NSEZ - violation of the Special Economic Zones Act, 2005, Special Economic Zones Rules, 2006 and the Customs Act - Officer of customs is a Proper Officer for the purposes of SEZ Act or not - HELD THAT - The Ld. Commissioner (Appeals) has not discussed as to how the provisions under the SEZ Act read with the SEZ Rules have been violated in the instant case and have failed to establish as to how the Appellant contravened Section 111(m), Section 112(a), 112(b) and Section 114AA of the Customs Act. Section 110 of the Customs Act is not a notified offence for the purposes of the SEZ Act vide Notification No. S.O. 2665(E) dated 05.08.2016 and therefore, even if by virtue of Notification No.110/2003, the Preventive Officer, NSEZ has been designated as an officer of Customs for the purposes of Customs Act, however by virtue of the Notification SO 2665(E), such officer had no power to detain the subject goods in terms of Section 110 of the Customs Act as the same is not a notified offence under the SEZ Act. In the absence of any notification issued by the Board authorizing the NSEZ officers below the rank of the jurisdictional Commissioner to seize the subject goods, the seizure of the subject goods was legally unsustainable and therefore, confiscation under Section 111(m) of the Customs Act pursuant to such seizure is also bad in law and therefore, is liable to be set aside - the subject vehicles which were made liable for confiscation under Section 115(2) of the Customs Act, and are in appeal is unwarranted for, since the subject vehicles were used for carrying the goods out of and into the NSEZ without the knowledge of the owner or person-in-charge of the subject vehicles which is a mandate as per the bare reading of Section 115 (2) of the Act. The confiscation of the goods and seizure of vehicles cannot sustain and it is hereby set aside - the penalty imposed on the Appellant is unwarranted - the impugned orders in both the appeals are set aside - appeal allowed.
Issues Involved:
1. Jurisdiction and authority of NSEZ officers under the SEZ Act and Customs Act. 2. Legality of seizure and confiscation of goods under Section 110 and Section 111(m) of the Customs Act. 3. Imposition of penalties under Sections 112(a), 112(b), and 114AA of the Customs Act. 4. Confiscation of vehicles under Section 115(2) of the Customs Act. Issue-wise Detailed Analysis: 1. Jurisdiction and Authority of NSEZ Officers: The Appellant argued that the officers of Customs mentioned under Rules 2(1)(c) and 2(1)(zd) of the SEZ Rules are appointed under the SEZ Act to discharge functions as specified in the SEZ Rules and do not automatically possess the powers and functions of a Proper Officer under the Customs Act. The reliance was placed on SEZ Instruction No.09/2011, which clarified that officers in SEZs are recruited from customs formations but do not have the powers of Proper Officers under the Customs Act unless explicitly delegated. 2. Legality of Seizure and Confiscation: The Appellant challenged the seizure of goods under Section 110 of the Customs Act, arguing that it is not a notified offence under the SEZ Act as per Notification No. S.O. 2665(E) dated 05.08.2016. The adjudicating authority failed to establish how the Appellant contravened Section 111(m) of the Customs Act. The Tribunal noted that the Preventive Officer, NSEZ, had no power to detain the subject goods under Section 110 of the Customs Act since it is not a notified offence under the SEZ Act. 3. Imposition of Penalties: The Appellant contended that the penalties imposed under Sections 112(a), 112(b), and 114AA of the Customs Act were unwarranted as the alleged violations were not notified offences under the SEZ Act. The Tribunal found that the adjudicating authority did not establish a clear contravention of the relevant sections of the Customs Act. 4. Confiscation of Vehicles: The Tribunal found that the confiscation of vehicles under Section 115(2) of the Customs Act was unwarranted. The subject vehicles were used for transporting goods without the knowledge of the owner or person-in-charge, which is a requirement under Section 115(2). Thus, the appeal regarding the confiscation of vehicles was allowed. Conclusion: The Tribunal concluded that the NSEZ officers lacked the authority to detain and seize the goods under Section 110 of the Customs Act as it is not a notified offence under the SEZ Act. Consequently, the confiscation of goods under Section 111(m) and the penalties imposed under Sections 112(a), 112(b), and 114AA were legally unsustainable. The confiscation of vehicles under Section 115(2) was also deemed unwarranted. Therefore, the appeals were allowed, and the impugned orders were set aside, granting consequential relief to the Appellant.
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