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TMI Blog2013 (9) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... officer under Rules 27(2) and 29 respectively – Held that:- Commissioner of Customs has assessed the Bill of Entry filed by the appellant-assessee before KASEZ authorities which he is not empowered to do so as per the provisions of Rule 29 of SEZ Rules, 2006 - when the goods are meant for SEZ and on going to SEZ, they are not liable for Customs duty and hence any question of valuation being determined under the provisions of Section 14 of the Customs Act, 1962 does not arise. Confiscation of Goods u/s 111(m) and 111(d) – Held that:- the confiscation ordered by the adjudicating authority of the goods which are as per LOA is incorrect and beyond his powers to do so. Accordingly, the impugned order to that extent is set aside. Regarding goods not allowed or entitled to be imported into SEZ - Held that:- the Customs authorities, on suspicion, could inspect the consignment and on the inspection, if they find any items which are not allowed or entitled to be imported into SEZ, they are within their powers to seize the goods and act in accordance with the law. In this case, since the items like leather bags, purses, jackets, and carpets, are not included in LOA granted to the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e partners were recorded. Upon the conclusion of the investigation, a show cause notices were issued to the main importers as well as the partners of the said importers to show cause as to why the declared value be not rejected and re-determined in accordance with the Customs Valuation Rules and the goods be not confiscated under the provisions of Section 111(m) and Section 111(d) of Customs Act, 1962 and why the penalties be not imposed under Section 113 on the company firm as well as the partners. The appellant assessee-company as well as the partners argued the case and sought time for filing detailed written submissions and subsequently filed the same, denying all the allegations and not accepting the charge of misdeclaration. The adjudicating authority did not agree with the contentions and upheld the charges on the appellant and rejected the declared value and also confiscated the goods with an option to redeem the same on payment of redemption fine and also imposed penalties on the appellant-assessees as well as the partners of the said firm. 3. Ld. Counsel Shri J.C. Patel, Shri Anil Balani, Ms. Shilpa Balani appeared on behalf of all the appellants. Ld. Counsel would subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1962 on the basis that the same are not required for the authorized operations. 2.4 The Commissioner has in the impugned Order turned a blind eye to the specific and unambiguous provisions of Rules 27(2) and 29 of the SEZ Rules and proceeded as if these Rules do not exist at all. He has not said a word about these Rules. His only findings on this point are in Para 25 of his Order where he has completely ignored the provisions of Rules 27(2) and 29 of the SEZ Rules. He has proceeded on a misconception that the Bill of Entry is filed with the Customs and he is under a further misconception that customs at the port have to give permission for transshipment. As submitted herein above the Bill of entry is filed with the authorized officer of SEZ and the mere presentation of the Bill of Entry registered with the authorized officer to the customs at the port of import operates as permission to transfer the goods and no permission is required from the customs officer. Most importantly whether the imported goods are required to be decided by the Development Commissioner as mandated in Rule 27(2) and not by the Commissioner of Customs at the port of import. 2.4 Similarly under Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-determined value under Section 14 is of no decision of the Tribunal in the case of UOI v. Glaxo Laboratories (I) Ltd. - 1984 (17) E.L.T. 284 (Bom.). 3. ON MERITS : Goods are clearly covered by LOA and are required for authorized operation : 3.1 Without prejudice to the aforesaid submissions that customs at the port have no jurisdiction to go into the question whether the imported goods are required for authorized operations, it is submitted that the imported goods are clearly covered by the LOA and required for the authorized operations. 3.2 The Show Cause Notice merely harped on the fact that the goods are not mixed and are already sorted according to their type i.e. jeans in separate bales, sweaters in separate bales, etc. Firstly, mixed clothing is only one item in the LOA and not the only item. Apart from mixed clothing, the LOA also covers used worn clothing uncut for mutilation and reconditioning of clothes selected from old, used worn clothings. Thus merely because the imported goods are not mixed but segregated into jeans, sweaters and so on, it cannot be said that they are not covered by the LOA. Secondly, the Show Cause Notice labored under the misconception tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner has completely ignored this data. 4.3 The Commissioner has erred in relying on the valuation report of Accurate Appraisal Services without giving their cross-examination. In the absence of cross-examination being given, no reliance could have been placed on the said report as laid down in the following judgments : Sounds N Images v. Collector - 2000 (117) E.L.T. 538 Swadeshi Polytex Ltd. v. CCE - 2000 (122) E.L.T. 641 (S.C.). 4. Ld. Additional Commissioner (AR) would submit that the Customs authorities had power to intercept the consignment even if they are meant for SEZ. It is his submission that on interception it was found that there were various other appellants who were not required for the manufacturing activity of SEZ and did not contain the same. It is his submission that the lower authorities were correct in coming to conclusion and the impugned order is correct. 5. We have considered the submissions made at length by both sides and perused the records. 6. There is no dispute that all the appellant-assessees were having a Letter of Approval from Development Commissioner, KASEZ, granted which entitled the appellant to import the following goods in their S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome to a conclusion that the goods which were declared and covered by LOA were neatly packed and ready in all respect and hence, cannot be considered as the goods for LOA. In order to appreciate the correct provision of law, we reproduce the provision of Rule 27(2) which reads as under :- In case of any doubt, as to whether any goods or services required by a unit or developer for authorized operation or not, it shall be decided by the Development Commissioner. 10. If the Customs authorities had any doubt as to the requirement of the goods by a unit in a SEZ for authorized operation or not, it should have been referred to the officers in KASEZ and left to them for arriving at a conclusion. In our considered view, the adjudicating authority, could not have exercised jurisdiction to come to a conclusion whether imported goods are required by the SEZ units or not and whether they are as per LOA or not; as we find that specific provision of Rule 27(2) of SEZ Rules, 2006 (as indicated hereinabove) mandates Development Commissioner to come to a conclusion. 11. We also find strong force in the contention raised by the ld. Counsel that the provisions of Rule 29 of SEZ Rules, 2006 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were correct in checking the consignment which were in the containers. In our view, on a specific intelligence, the Customs authorities, on suspicion, could inspect the consignment and on the inspection, if they find any items which are not allowed or entitled to be imported into SEZ, they are within their powers to seize the goods and act in accordance with the law. In this case, since the items like leather bags, purses, jackets, and carpets, are not included in LOA granted to the appellant for import into the SEZ for authorized operations, are liable to be confiscated and we hold it so. The value of the said goods should be determined in accordance with the law and the redemption fine be imposed in proportion to the value of such goods and imposition of proportionate penalties also needs to be imposed. 15. We were informed that all the containers are stuck up at Kandla and are not allowed to be moved to SEZ due to the impugned order. As we have already set aside the findings of the adjudicating authority as regards the goods which are allowed to be imported into the SEZ, we direct the lower authorities to release containers in which the goods are found to be as declared and c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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