2018 (8) TMI 431 - AT - Customs

Jurisdiction of Customs officer to seize the goods - SEZ units / SEZ area - Held that - The appellants are located in Special Economic Zone and having a license to import the impugned goods - reliance placed in the case of MORGAN TECTRONICS LTD. VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI 2014 (9) TMI 985 - CESTAT NEW DELHI , where it was held that in terms of the Section 53(1) of the SEZ Act, 2005, the SEZ is deemed to be territory outside the Customs Territory of India, and the goods imported were meant for the unit in SEZ Noida. The Customs officers have no jurisdiction on the appellant to seize the goods in S.E.Z. area therefore seizure of the goods in question is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against seizure and confiscation of goods in Special Economic Zone (S.E.Z.), jurisdiction of Customs officers in S.E.Z., applicability of Section 53(1) of the SEZ Act, 2005, imposition of redemption fine and penalties.

Analysis:
The appellants challenged the impugned order where their goods were seized by the Directorate of Revenue Intelligence (D.R.I.) and later confiscated, leading to the imposition of redemption fine and penalties. The appellants, located in S.E.Z. with a license to import goods for re-export after processing, imported brass scrap which was alleged to be prime material by the D.R.I. Consequently, the goods were held liable for confiscation, and penalties were imposed, including differential duty and interest. Personal penalties on co-noticees were also levied. The Tribunal considered the jurisdictional aspect, citing the SEZ Act, 2005, and the case law of Morgan Tectronics Ltd. v. Commissioner of Customs, New Delhi. The Tribunal held that as per Section 53(1) of the SEZ Act, SEZ is deemed outside the Customs Territory of India, and only the Customs officers in the Noida SEZ unit have jurisdiction. Therefore, the Customs officers had no jurisdiction to seize the goods in the S.E.Z. area, leading to the setting aside of the seizure and confiscation orders. Consequently, no demand could be confirmed against the appellants, and the confiscation of the goods was also set aside.

The Tribunal ruled that since the Customs officers lacked jurisdiction to seize the goods in the S.E.Z. area, redemption fine and penalties were not imposable on the appellants. Therefore, the appeals were allowed with consequential relief, if any. The judgment emphasized the specific jurisdictional limitations of Customs officers in S.E.Z. areas under the SEZ Act, 2005, and the necessity for adherence to such provisions to prevent wrongful confiscation and imposition of penalties.