2016 (11) TMI 851 - AT - Customs

SEZ unit - import gold and export manufactured gold jewellery and are a net foreign exchange earner under SEZ scheme - earrings were rejected by the foreign buyer due to polishing defect; and returned jewellery weighing 2294.840 gms. The defective jewellery weighing 2294.840 gms., imported by the appellant vide Bill of Entry No. 2062 dated 22.04.2009 was exchanged with well polished jewellery weighing 2294.840 gms., which was seized by Customs on 26.04.2009 - Whether the appellant removed duty free imported gold jewellery 2294.840 gm. valued at ₹ 29,44,823/- involving custom duty of ₹ 3,35,795/- without payment of custom duty in a clandestine manner? - Held that - during the relevant period, the customs did not have necessary jurisdiction within the territory of Special Economic Zone. Hon ble Gujarat High Court in Morgan Tectronics Ltd. vs. CC, New Delhi 2014 (9) TMI 985 - CESTAT NEW DELHI make the matter clear, where it was held that the Commissioner of Customs, Air Cargo, New Customs House, New Delhi had no jurisdiction to confiscate these goods and impose penalty on the appellant and it is only the Joint/ Dy. Commissioner/ Asstt. Commissioner of Customs, in Noida SEZ Unit, who had the jurisdiction to take necessary action The customs did not have jurisdiction within Special Economic Zone established under SEZ scheme by the Ministry of Commerce, Government of India and present proceedings initiated by the customs were beyond jurisdiction. Therefore, impugned order is without proper authority of law and is hereby set-aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Jurisdiction of customs authorities in Special Economic Zones (SEZ) under SEZ Act, 2005.

Analysis:
The appellant imported defective jewellery which was exchanged with well-polished jewellery seized by Customs. The department alleged that duty-free jewellery was removed without payment of custom duty in a clandestine manner. The appellant argued that SEZ is considered a foreign territory, and SEZ laws govern activities within SEZ, not Customs laws. They contended that investigations, search, and recovery of duties should be carried out under SEZ laws, not Customs Act, 1962. The appellant cited case laws to support their arguments.

The Tribunal found that during the relevant period, customs did not have jurisdiction within SEZ territory. Referring to previous judgments, the Tribunal highlighted that SEZ is deemed outside the Customs Territory of India. The Tribunal emphasized that specific authorities under SEZ Act, 2005 have jurisdiction over matters within SEZ. Citing the Apex Court's decision, the Tribunal emphasized the importance of satisfying jurisdictional requirements before issuing show cause notices. Based on the precedents and legal provisions, the Tribunal concluded that customs lacked jurisdiction in SEZ established under SEZ scheme by the Ministry of Commerce. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.