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TMI Blog2010 (7) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... nnai - the competent authority of the customs departments cannot take any action against the writ petitioners on the basis of the report submitted by the Customs House Laboratory, Kandla though it has power to take such action, as permissible under the law, if any irregularity is found pursuant to the report submitted by the CIPET, Ahmedabad or the CIPET, Chennai. The learned Single Judge, having failed to notice the aforesaid facts and the provisions of law and having erred in coming to the conclusion that the officials of the customs departments has no jurisdiction to take any steps in view of the Section 53 of the SEZ Act, 2005, we set aside the order passed by the learned Single Judge. - 256 of 2010 - - - Dated:- 6-7-2010 - S.J. Mukhopadhaya, C.J. and Akil Kureshi, J. REPRESENTED BY : Shri P.S. Champaneri, ASG, for the Appellant. S/Shri P.M. Thakkar, Sr. Advocate, with Navin K. Pahwa, for the Respondent. [Judgment per : S.J. Mukhopadhaya, C.J. (Common Cav)]. The petitioners of all the original petitions challenge the action of the Customs Officials of Customs Stations at Kandla and Mundra in seizing and detaining the containers imported on behalf o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fined under Rule 2(o) of the Special Economic Zone Rules, 2006. Rule 2(q) defines Handbook , which means Handbook of Procedures framed under the Foreign Trade Policy. The Import Policy, which is a statutory policy, is binding on all concerned. Under the said Policy, a complete mechanism of import of plastic waste/scrap has been provided. Under Clause (vii), the customs authority is required to draw representative samples from the consignments and send the same to the nearest laboratory/office of the Central Institute of Plastic Engineering Technology (CIPET) and verify whether such imported consignment is in conformity with the Import Policy. 6. The learned counsel for the petitioners would further contend that the Central Government by notification dated 13-1-2010 has provided that the offences covered under the FTDR Act shall be the notified offences under Section 21(1) of the Special Economic Zones Act, 2005 (hereinafter referred to as the SEZ Act, 2005 ) and the Development Commissioner of the concerned zone shall be the Enforcement Officer under Section 21(2) of the said Act. Accordingly, with effect from 31-1-2010, the Development Commissioner of the concerned zone, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1962 is not applicable to the exports being effected from the units located in a territory outside the customs territory of India. He would further contend that the SEZ Act, 2005 has the overriding effect of the Customs Act, 1962 in view of Section 51 of the said Act, in case of inconsistency between the same. There being inconsistency in the present case, the SEZ Act, 2005 will be applicable over the Customs Act, 1962. 9. On factual aspect, it was brought to the notice of the Court that the Customs Officials at the transit ports, who are under the office of the Commissioner of Customs at Kandla/Mundra SEZ, started taking impugned action of seizure/detention of containers imported by the petitioners in Kandla SEZ, since July, 2009; the representative samples were drawn by these officers and were sent to the CIPET, Ahmedabad, which is the nearest CIPET laboratory. This was done as per Clause (vii) of the Public Notice No. 392(PN)/92-97 dated 1-1-1997. The CIPET, after examination of the samples, submitted reports and found all the containers to be positive. Inspite of the fact that the samples were found to be in conformity with the Import Policy, it appears that the Customs Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f re-cycling of plastic scrap into plastic granules and agglomerates agro products in their respective units. According to the Union of India, in relation to import of plastic waste, the Director General of Foreign Trade issued Public Notice No. 392/97 dated 1-1-1997 empowering import of plastic waste scrap (except PET bottle waste/scrap) only against license. The definition of plastic waste/scrap has been shown at Clause 1(i) and is permitted to import in different forms like compressed film in cut condition, cut tape soft waste, flakes, order, pieces of irregular shape (not exceeding the size of 3 x 3 ). Any other category of plastic scrap/waste not shown in the description/definition are not permitted to be imported. Such plastic scrap/waste conforming to the description are permitted to be imported only by the actual users who have the required facility for re-cycling such a scrap/waste and who are duly registered with the competent State/Central authority and also possess pollution clearance certificate from the concerned State Pollution Control Board where the unit is located as well as the capacity assessment certificate. Under the aforesaid Clause 1(i), the plastic scrap/w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment is accompanied by the movement document in Form-9 and the test report of analysis of hazardous waste consignment in question, from a laboratory accredited by the exporting country . As per Clause (6) of the said Rule 16, the customs authority shall collect three randomly drawn sample of the consignment (prior to clearing the consignment as per the provisions laid down under the Customs Act, 1962) for analysis and retain the report for a period of two years, in order to ensure that in the event of any dispute, as to whether the consignment conforms or not to the declaration made in the application and movement document . 15. It was further contended that as per Clause (5) of Rule 28 of the SEZ Rules, 2003, the goods imported by the unit or developer shall be allowed to be transferred from the port or airport to the Special Economic Zone without examination by the customs authority at the port or airport, as the case may be, provided the goods may be examined with prior permission of the Assistant or Deputy Commissioner of Customs in writing in case there is specific adverse information or intelligence. The customs authorities at the Port had an intelligence, on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorized persons of the respective petitioners were recorded and during the statement they have admitted that they have imported plastic scrap/waste containing stickers, which are cut and the same are sent to Ahmedabad and Juna Kataria for burning and dumping. The officers of the 3rd and 4th respondents had collected samples from the petitioner-units in Kandla SEZ and their statements were recorded under Section 108 of the Customs Act. During their statements, they have admitted that they have only verified the mark numbers and seal of the containers as per the order of the Appraiser and were not aware of the Import Policy for plastic scrap and the provisions of the Hazardous Wastes Rules, 2008 pertaining to import of plastic scrap. The plastic scraps/wastes were examined in the laboratory of the customs authority situated within Kandla SEZ and having not found in conformity with the Acts and the Rules, show cause notices have been issued on different petitioners under Section 124 of the Customs Act, 1962 read with Hazardous Wastes Rules, 2008. 17. The learned counsel for the appellant would contend that merely on the basis of the observations made by this Court in its interim or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Rules, Section 76H relates to goods utilized within the Special Economic Zone. The other provisions have been made under Sections 76-I to 76N of the said Act. 20. The Special Economic Zones Act, 2005 was notified on 23-6-2005. By Notification No. SO 195(E), dated 10-2-2006, the provisions of Sections 1 to 19, 25 to 32 and 42 to 58 were given effect from 10-2-2006. Sections 31 to 41 came into force on 1-10-2008 vide Notification No. SO 2320(E), dated 1-10-2008. Under Section 51 of the SEZ Act, 2005, as it was stipulated that the provisions of the said Act shall have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force, and similar provisions like Chapter X-A of the Customs Act, 1962 were promulgated, the said Chapter X-A containing Sections 76A to 76N was omitted by Act 22 of 2007, Section 99, with effect from 11-5-2007. 21. We have noticed that under Section 51 of the SEZ Act, 2005, the provisions of the SEZ Act shall have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of undertaking authorized operation. Said Kandla SEZ, in view of such notification dated 14-3-2006 issued by the Central Government, shall be deemed to a Port under Section 7 of the Customs Act, 1962. 24. Authorized operation has been defined under Section 2(c) of the SEZ Act, 2005 which means operation which may be authorized under sub-section (2) of Section 4 and sub-section (9) of Section 15 of the said Act. Sub-section (2) of Section 4 of the SEZ Act, 2005 stipulated as follows :- 4. Establishment of Special Economic Zone and approval and authorization to operate to, Developer. - (2) After the appointed day, the Board may, authorize the Developer to undertake in a Special Economic Zone, such operations which the Central Government may authorize. Similarly, under sub-section (9) of Section 15 of the SEZ Act, 2005, the following provisions have been made :- 15. Setting up of Unit. - (9) The Development Commissioner may, after approval of the proposal referred to in sub-section (3), grant a letter of approval to the person concerned to set up a Unit and undertake such operations which the Development Commissioner may authorize and every such operation so autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said notification. 21. Single enforcement officer or agency for notified offences. - (1) The Central Government may, by notification, specify any act or omission made punishable under any Central Act, as notified offence for the purposes of this Act. (2) The Central Government may, by general or special order, authorize any officer or agency to be the enforcement officer or agency in respect of any notified offence or offences committed in a Special Economic Zone. (3) Every officer or agency authorized under sub-section (2) shall have all the corresponding powers of investigation, inspection, search or seizure as is provided under the relevant Central Act in respect of the notified offences. 22. Investigation, inspection and search or seizure. - The agency or officer, specified under Section 20 or Section 21, may, with prior intimation to the Development Commissioner concerned, carry out the investigation, inspection and search or seizure in the Special Economic Zone or in a Unit if such agency or officer has reasons to believe (reasons to be recorded in writing) that a notified offence has been committed or is likely to be committed in the Special Economic Zone : Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horized the Development Commissioner of the jurisdictional Special Economic Zone to be the Enforcement Officer in respect of the notified offences committed in a Special Economic Zone. The relevant portion of the notification is quoted hereunder :- SO 77(E). Whereas the Central Government, in exercise of the powers conferred by sub-section (1) of Section 21 of the Special Economic Zones Act, 2005, (28 of 2005), has specified the acts or omissions punishable under the Foreign Trade (Development and Regulation) Act, 1992 (28 of 2005) as notified offences for the purposes of the Special Economic Zones Act, 2005 (28 of 2005); Now, therefore, in exercise of the powers conferred under sub-section (2) of section 21 of the Special Economic Zones Act, 2005 (28 of 2005), the Central Government hereby authorizes the Development Commissioner of the jurisdictional Special Economic Zone to be the enforcement officer in respect of the notified offences committed in a Special Economic Zone. 27. From the aforesaid notifications, while it will be evident that the offence under the Foreign Trade (Development and Regulation) Act, 1992 has been notified as notified offence under sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain metals and inorganic materials B3010 Solid plastic waste : The following plastic or mixed plastic waste, provided they are not mixed with other wastes and are prepared to a specification : - Scrap plastic of non-halogenated polymers and copolymers, including by not limited to the following : Ethylene Styrene Polypropylene Polyethylene terephthalate Acrylonitrile Butadiene Polyacetals Polyamides Polybutylene tere-phthalate Polycarbonates Polyethers Polyphenylene sulphides Acrylic polymers Alkanes C10-C13 (plasticizer) Polyurethana (not containing CFCs Polysiloxanes Polymethyl methacrylate Polyvinyl alcohol Polyvinyl butyral Polyvinyl acetate - Cured waste resins or condensation products including the following : urea formaldehyde resins p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilarly, no officer or agency has been declared as Enforcement officer or Agency under sub-section (2) of Section 21 of the SEZ Act, 2005 for the purpose of the Customs Act or any other Central Act. 33. We have also notified that Section 53 of the SEZ Act has been given effect in regard to Kandla SEZ, Gandhidham with effect from 14-3-2006. From the date of such notification, the Kandla SEZ, Gandhidham is deemed to be a territory outside the customs territory only for the purpose of undertaking the authorized operation . That means the customs authority, who were empowered under Section 76G (repealed since 11-5-2007), has no power to authorise any developer to undertake any operation in the Special Economic Zone nor has the power to approve any proposal for setting up any unit within the Kandla SEZ. 34. But Section 53 being limited to that extent of authorized officer , who was earlier empowered to perform certain jobs under Chapter XA, the power of the Customs authorities under the Customs Act, including the power to confiscate and impose penalty under Sections 111 to 114, as enumerated in Chapter XIV of the Customs Act, is not taken away. 35. Thus, we hold that the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the plastic scrap/waste would also required to furnish a declaration to the customs authorities at the time of clearance of goods certifying that the plastic scrap/waste imported by him and for which clearance is being sought strictly confirmed to the description/definition as given in the sub-para (i) and (ii) above and that it is free from any kind of toxic/non-toxic contamination and has not been put to any previous use whatsoever. (vii) Before the clearance of the plastic waste/scrap, all imported consignments of such plastic scrap/waste shall be subjected to scrutiny and testing of sample. Custom authority shall for this purpose draw a sample and send the same to the nearest laboratory/office of the central institute of plastic engineering and technology (CIPET) with a view to having same analyzed and verified that such imported consignment are in conformity with the description/definition as given in para (i) and (ii) above. (ix) In case of misdeclaration regarding the material being free from any toxic/hazardous substance by the importer, action as per laws of Ministry of Environment and Forests applicable under the Environment (Protection) Act for committing offenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that - (a) the report of the CIPET, Ahmedabad will prevail over the report submitted by the Customs House Laboratory, Kandla in view of the policy decision of the Central Government vide Public Notice No. 392 (PN)/92-97 dated 1-1-1997; and (b) the report of the Customs House Laboratory, Kandla is otherwise vague and not specific about any hazardous material and on the contrary it is accepted that heavy metals are within the permissible limit. It is further alleged that it is not scientific and based on assumption and not on the basis of any test. 41. Per contra, according to the counsel for the appellant-Union of India, in view of the direction of the Supreme Court in Research Foundation for Science Technology and National Resource Policy v. Union of India (supra), Customs House Laboratory, Kandla has been upgraded; as per the policy decision No. 392 (PN)/92-97 dated 1-1-1997, the nearest laboratory being Customs House Laboratory, Kandla, the said report will prevail over the report by the CIPET, Ahmedabad. 42. We have also noticed Clause (vii) of Public Notice No. 392(PN)/92-97, dated 1-1-1997, which relates to clearance of imported plastic waste/scrap. Therein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chennai are not before us, we are not expressing any opinion, but leave it open to the officials of the competent authority of the customs department to decide the show cause reply on the basis of the report submitted by the CIPET, Ahmedabad or the CIPET, Chennai, without giving any credential to the report submitted by the Customs House Laboratory, Kandla . A decision in one or other way be taken immediately, but not later than a period of one month from the date of receipt/production of this order. If nothing is found against one or other petitioners, the seized goods, if any, should be released and the proceedings should be dropped. However, if any adverse decision is taken on the basis of the report submitted by the CIPET, Ahmedabad or Chennai, the authority may pass appropriate reasoned order taking into consideration the reply, if any, submitted by one or other writ petitioners, but within the aforesaid period of one month from the date of receipt/production of this order. The learned Single Judge, having failed to notice the aforesaid facts and the provisions of law and having erred in coming to the conclusion that the officials of the customs departments has no jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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