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TMI Blog2014 (2) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... ical products over an area of 1087 Acres (440 Hectares). An in-principle approval was also granted in the same letter for expansion of the SEZ into multi-product SEZ, as and when minimum additional area of 1000 Hectares was acquired by the assessee. As per the provisions of SEZ Act, under Section 4(i) read with Rule 8 of SEZ Rules, 2006, a formal notification was issued on 19.04.2006, notifying the area of 1087 Acres (440 Hectares) as SEZ. The assessee applied to the Development Commissioner for setting up of a SEZ unit in the approved SEZ and submitted details of process of acquisition of additional land. The Development Commissioner issued a letter of approval to RIL on 04.05.2006 to set up an SEZ unit. The developer also acquired the possession of additional land of 1813 Acres for expansion of SEZ for which in principle sanction had already been granted by Govt. of India. The developer also made a request on 03.08.2006 for formalizing the in-principle approval for additional land pointing out that large work force has already been mobilized for construction activities on additional land. During the interim period, RIL received duty free steel plates, structural steel and tor ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 1. Demand for Customs duty amounting to Rs.49,37,90,415/- on the goods removed to non-SEZ area under Section 30 of the SEZ Act, 2005 read with Rule 25/34 of SEZ Rules, 2006 as detailed in Annexure A to D to show cause notice is confirmed and this amount is recoverable from M/s Reliance Industries Ltd and M/s Reliance Industries Ltd are directed to pay the said amount of Rs.49,37,90,415/- forthwith. The amount of 44,37,90,316/- paid by M/s Reliance Industries Ltd during / prior to the investigation of the case by DRI as detailed in the show cause notice is appropriated against the said duty liability of Rs.49,37,90,415/-. The remaining amount, i.e. Rs.5,00,00,099/- is recoverable from them. M/s Reliance Industries Ltd is directed to pay the said amount forthwith. 2. Interest at the applicable rate for the period as mentioned in Para 62, 62.1 and 62.3 of the show cause notice is also recoverable from M/s Reliance Industries Ltd on the duty confirmed as at Sr.No.1 above, and M/s Reliance Industries Ltd is ordered to pay the same forthwith along with remaining amount as at Sr.No.1 above. 3. Goods valued at Rs.1,82,24,32,482.35 seized on 11.07.2007 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 (Del) 3.2 In the present case there already existed an in-principle approval for the additional land of 1000 hectares to be part of the existing SEZ and the same was also thereafter formally notified as part of the SEZ. Consequently, to deny the benefit of SEZ to the appellant in respect of the said additional land in respect of the goods taken to the said additional land in the interregnum between the grant of in-principle approval and the formal notification would clearly be contrary to the ratio of the aforesaid decisions. 3.3 The principle laid down in the aforesaid decisions has in fact been applied to the case of a SEZ unit by this Hon'ble Tribunal in the case of Zydus Mayne Oncology Pvt. Ltd. reported in 2010 (262) ELT 0280 (Tri-Ahmd), in which the Tribunal has by following the aforesaid decisions laid down that there can be no duty liability in respect of goods which are received pending the grant of letter of approval by the Development Commissioner to a SEZ unit and so long as the goods are used for the purpose of the SEZ there can be no duty on such goods notwithstanding that they were received in the unit while its application for approval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This means that once on 4-6-2007 the Notification was issued in respect of the additional land, the appointed day for such additional land would be 19-4-2006. This clearly supports the Appellant's case that the once the Notification in respect of the additional land is issued on 4-6-07 it would relate back to 19-4-2006. Consequently the duty liability on the steel taken to the additional land does not arise. Section 2(a) of the SEZ Act, 2005 contemplates only one appointed day which is in reference to the Notification of the original SEZ and any subsequent Notification for inclusion of additional area as part of the original SEZ would relate back to the said appointed day. 3.7 It is submitted that section 2(a) of the SEZ Act 2005 provides that the "appointed day" with reference to a Special Economic Zone means the date on which the special Economic zone is notified by the central Government under sub-section (1) of section 4, which in the present case is 19-4-2006. It is evident from the said Section 2(a) that the appointed day is defined with reference to the Special Economic zone alone and not with reference to any additional area subsequently included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstruction RTF Tanks which became part of the SEZ refinery and were ultimately used only for export production. Since the temporary removal of goods had not been put to any other use, inconsistent with the underlying object of the permission granted under Rule 50, the breach, if any, of the conditions imposed under the permission granted under Rule 50 ought to have been considered as a technical breach, not warranting denial of the substantive benefit of the permission granted under Rule 50 of the SEZ Rules, 2006. 3.9 Rule 50 (e) of the SEZ Rules 2006 permits a unit in SEZ to temporarily remove without payment of duty any goods to DTA with the approval of the Authorized officer. By letters dated 31-8-2006 and 18-10-2006 the Appellant had sought permission for removal to and storage of goods in area of 25 acres and 416.47 acres respectively comprised in the said additional land and such permission was duly granted and extended from time to time by the Authorized officer. In fact in the application dated 18-10-2006 the Appellant had clearly pointed out that it would undertake construction activities in the additional land which was expected to be shortly notified as pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tics v CCE 1994 (71) ELT 914 - Lupin Laboratories Ltd v CCE In which it is held that the purpose of stipulating the procedure of obtaining permission under Rule 57F was to ensure that the inputs are eventually received back in the factory and used in the manufacture of dutiable goods and where there is no dispute about the fact of the eventual use of the inputs in the manufacturer's factory the mere fact that the procedure of Rule 57 F was not followed would not be sufficient to deny the substantive benefit of Rule 57F. The Commissioner should have applied the ratio and principle laid down in the said decisions to the present case and he should have held that in the context of Rules 50 d 51 also, the purpose of stipulating the procedure of obtaining the permission of the authorized officer is to ensure that the goods which temporarily go to the DTA are eventually used in the SEZ and since there is no dispute in the present case about such eventual use in the SEZ the substantive benefit of the said Rules cannot be denied merely because the procedure of permission was not allegedly followed for taking the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision for recovery of duty under the SEZ Act and Rules, the demand made by the Show Cause Notice was liable to fail. The Commissioner should have followed the following decisions which hold that a mere provision in a statute which creates a liability or obligation to pay an amount is not sufficient and that in the absence of a machinery provision for recovery of such amount, no proceedings can lie for demanding and recovering such amount: Eternit Everest Limited v UOI - 1997 (89) ELT 28 Pushpaman Forgins v. CCE - 2002 (149) ELT 490 [maintained in 2003 (153) ELT A 89] Rochees Watches v CCE - 2003 (152) ELT 420 The Commissioner erred in not following the above decisions by making a bald observation that the said decisions are distinguishable on facts and not applicable to the present case. He has not indicated as to how according to him the said decisions are distinguishable and he has assigned no reasons or grounds to indicate as to why according to him the ratio and principle laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the Customs Act relating to search and seizure, certainly could be invoked for the purpose of investigating an alleged violation of Chapter XA of the Customs Act, 1962. However, after 10-2-2006, when the SEZ Act, 2005 has been notified specifically codifying the entire law relating to SEZ, the provisions of Customs Act, 1962 are no longer invokable for investigating any alleged violation of the provisions of the SEZ Act and the Rules made there under. This is made amply clear by Section 52 of the SEZ Act, 2005. 3.18 The Commissioner erred in not appreciating that SEZ Act, 2005 does not contain any referential provision making any of the provisions of the Customs Act, 1962 applicable to inquiries and proceedings under the SEZ Act, 2005. Such referential provision exists in several other Central Enactments; for instance, Section 12 of the Central Excise Act, 1944, enables application of certain provisions of the Customs Act, 1962 for proceedings under the Central Excise Act, 1944. Likewise, sub-section (8) of Section 3 of the Customs Tariff Act, 1975 contains referential provisions enabling application of certain provisions of Customs Act, 1962 to proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of duty on goods cleared from SEZ is not under the Customs Act 1962 but is under the SEZ Act and that the provisions of Section 28 cannot apply for recovery of such duty and yet he has proceeded to hold that in case of non payment of such duty the customs department does not require any authority other than the authority under the Customs Act 1962. The learned Commissioner has overlooked this fact that the term 'duty' has been defined in Section 2(15) of the Customs Act, 1962 to mean "a duty of Customs leviable" under the said Customs Act, 1962. In the present case the duty which has been demanded is a duty payable under Section 30 of the SEZ Act, 2005 and not duty payable under the Customs Act, 1962. The Customs Act, 1962 confers no authority whatever on the DRI officers or on the Commissioner of Customs to investigate and adjudicate on alleged contraventions under the SEZ Act 2005. 3.20 The Commissioner erred in relying on Rule 25 of the SEZ Rules 2006 to hold that by virtue of the said Rule 25 the DRI had jurisdiction to initiate action under the Customs Act 1962 against a SEZ unit. He erred in not appreciating that the said Rule 25 merely stipulates that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that Section 5 of the SEZ Act gives it overriding effect as against any other law, it is settled legal position that a Special Law would prevail over general law and that powers under the later cannot be exercised over the subject matter of the former. In the present case as between the customs Act 1962 which deals with imports generally, and the SEZ Act, which deals with SEZ in particular the later is a special law in respect of goods imported in SEZ or taken out of SEZ and consequently the powers and provisions under the Customs Act 1962 are inapplicable to SEZ goods. He erred in not following in this behalf the judgment of the Hon'ble Supreme Court of India in the case of Suresh Nanda v central Bureau of Investigations - 2008 (3) SCC 674 which lays down that the special law will prevail over a general law. 3.23 The Commissioner erred in holding that the steel taken to the RTF by the Appellant is liable for confiscation under Section 111(i) of the Customs Act 1962. He erred in not appreciating that Section 111 (i) applies to dutiable or prohibited goods and that the goods in question are neither dutiable nor prohibited goods. Dutiable goods would by virtue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the duty which has been demanded from the appellant was the one leviable under Section 30 of the SEZ Act, 2005 and not under Section 12 of the Customs Act, 1962, there was no basis left for the Commissioner to come to such a conclusion. 3.25 The Commissioner erred in holding that the steel taken to the RTF is liable to confiscation under Section 111(o) of the Customs Act 1962. The Commissioner has himself held that there has been no misuse or diversion of the said goods and the same have been used in construction of the tanks which became part of the SEZ. Consequently the goods have been put to the use subject to which the same were exempted and hence Section 111(o) has no application to the present case. RELIANCE PLACED ON DECISION IN ESSAR STEEL LTD BY COMMISSIONER NOT CORRECT 3.26 The Commissioner has erroneously relied upon the decision of the Gujarat High Court in the case of Essar Steel Limited v UOI-2010 (249) ELT 3 to support his interpretation that in view of Section 51 of the SEZ Act the provisions of the Customs Act 1962 shall apply to a SEZ. There is nothing in the said judgment to support the interpretation the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present case, since as submitted here in above the goods are not liable to confiscation under Section 111, no penalty under section 112(a) is imposable in the present case. Without prejudice to this submission, it is submitted that no penalty ought o have been imposed in view of the Commissioner's own findings that there had been no misuse or diversion of the material and that the same had been used only in construction of the tanks which became part of the SEZ and that by way of abundant caution the Appellant had been paying the duty even before commencement of investigation by DRI. Further, the Commissioner has himself accepted that the material which was used in the RTF eventually became part of the SEZ and that the SEZ scheme is for export promotion. He has also accepted that in view of the in-principle approval the Appellant may be acting under a bona fide belief and commenced use of the steel in construction of the RTF to complete the project in time for which huge work force had been mobilized and that there was delay in issuance of the formal notification for the additional land. In view of these findings the Commissioner ought not to have imposed any fine and penalty. & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearance from the warehouse take place under the provisions of the Customs Act 1962 itself and consequently the provisions of the Customs Act relating to the charge of duty under that Act and the machinery provisions for recovery of duty under that Act would apply to warehoused goods. This is not so in the case of SEZ which is governed by a separate enactment other than the Customs Act 1962. The charge in respect of goods cleared from SEZ is not under the Customs Act but under the SEZ Act and therefore section 28 of the Customs Act cannot apply to goods cleared from SEZ unlike in the case of goods cleared from a customs bonded warehouse which is governed by the provisions of the Customs Act. 4.5 since as rightly held by the commissioner section 28 of the Customs Act does not apply it would follow that interest under section 28(A) of the Customs Act 1952 and penalty under section 114A of the Customs Act 1962 are not attracted in the present case. 6. Shri P.R.V. Ramanan, Special Counsel, appointed by the Revenue for arguing this matter submitted as under:- Without prejudice to the appeals filed by the Department, the findings recorded by the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e specifically provided in the notifications, the notifications issued under the statute will not have retrospective effect. Therefore, this additional land area/will be entitled to the benefit available to SEZ only with effect from 04.06.2007. In view of this, the Case Laws relied upon by the appellant are not applicable to the facts of the present case. During the period from 19.04.2006 (when 440 hectares area was notified as SEZ) to 04.06.2007 (when additional area was notified as SEZ), there was no notification under 2nd proviso to Section 4(1) of the SEZ Act, 2005 for this additional area to be considered as part of the already notified SEZ and therefore, this area cannot be considered as SEZ. B. The permission granted to RPL under Rule 50 for removal of goods from the SEZ to the temporary storage area vide their applications of August, September & October, 2006 did not cover further removal of the goods from that permitted storage area. Therefore, the removal of goods from the permitted storage place to the additional land including RTF was unauthorized and was without any permission sought or permitted under Rule 50. Therefore, the question of grant of permissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions having been satisfied. Obviously, the appellant's claim for rebate of additional amount of duty was also liable to be allowed. Thus, the Tribunal allowed the appeal on the ground of revenue neutrality. No benefit and/or concession can be claimed on the specious plea of revenue neutrality without following the prescribed procedure, which, in this case, was mandatory. D. In terms of Rules 25 & 34 of the SEZ Rules, 2006, RPL ought to have filed bills of entry before removal of the goods from the SEZ to the DTA which was the mandatory requirement under the provisions of Section 46 of the Customs Act, 1962. In this connection, reliance is placed on the judgment of the Hon'ble Apex Court in the case of State of Jharkhand v/s. Ambay Cements -2004 (178) ELT 55 (SC) . In para 26 of the Judgment, the Hon'ble Apex Court has held as follows: "26. Whenever the statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. It is the cardinal rule of the interpretation that where a statute pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id after clearance of the goods. This submission is without prejudice to the Department's contention that Section 28 of the Customs Act is applicable. F.1 It is contended that the provisions of the Customs Act have not been made applicable to the provisions of the SEZ Act, 2005. In other worlds, the SEZ Act, 2005 does not contain any referential provision making any of the provisions of the Customs Act, 1962 applicable to inquires and proceedings under the SEZ Act, 2005.- In this connection, Rule 25 of the SEZ Rules, 2006 may be seen Rule 25 reads as follows: "RULE 25: where on entrepreneur or Developer does not utilize the goods or services on which exemptions, drawbacks, cess and concessions have been availed for the authorized operations or unable to duly account for the same, the entrepreneur or the Developer, as the case may be, shall refund an amount equal to the benefits of exemptions, drawback, cess and concessions availed without prejudice to any other action under the relevant provisions of the Customs Act, 1962, the Customs Tariff Act, 1975, the Central Excise Act, 1944, the Central Excise Tariff Act, 1985, the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 111 (i) and (o) of the Customs Act, 1962. With respect to Section 111(i), the findings of the Commissioner are to the effect that the SEZ is a warehouse where goods were admitted without payment of duty for authorised operations. However, the said goods were removed from the SEZ to the DTA without payment of duty and without following the prescribed procedures. Bills of entry were filed much later only to regularize the irregularities. Therefore, provisions of section 111 (i) are clearly attracted, with respect to section 111 (o), the Commissioner has held that the impugned goods were brought to the SEZ by RPL after availing exemption/concession of duties for the intended purpose, i.e for authorised operations, but the same were removed to the DTA without permission and without payment of duties and without following the prescribed procedure. Hence, the said goods attract the provisions of Section 111 (o) of the Customs Act, 1962. No fault can be found with the order of the Commissioner. G.2 Since the commissioner has held that the goods are liable to confiscation under Section 111 (j) and (o), imposition of penalties under Section 112 (a) of the Customs Act, is leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner has, therefore, clearly erred in holding that Section 28, 28AB and 114A of the Customs Act, 1962 have no application to the facts of this case. In view of the above submission, the appeals filed by RPL and others may be rejected as devoid of merit. Further, the appeals filed by the Department may be upheld and suitable orders passed in the matter. 7. In continuation of this Hearing, this Bench granted leave to the appellant to file rejoinder the written submissions on behalf of the appellant. The same was submitted 27.02.2013, which is taken on record. In said rejoinder the appellant would submit that on the facts of the case as narrated by the Revenue in their written submissions, they would like to submit that in narration of facts, the Department written submission overlooked the few relevant facts which are undisputed. It is his submission in principle approval for expansion of SEZ into multi-product SEZ was granted to a developer with formal approval granted in respect of initial land of 440 Hectares (1087 Acres) of land. In pursuant to grant of in principle approval, the steps were taken immediately by Gujarat Government as well as Developer for acquisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007, had specifically stated that the specified area are to be included as a part of that SEZ. It is his submission another fact which is overlooked is that all removals from SEZ to so called DTA covered by permission were, in fact, first stored in the permitted store area and thereafter the same was shifted to the RTF area for construction of spheres/tanks. It is also his submission that it is wrong to say that the notification dt.4.6.2007 cannot relate back to 19.04.2006, also it is incorrect to say that it tantamounts to giving retrospective effect notification. It is further submitted that the clearances on which duty liability was confirmed, took place only after 03.08.2006 by which time, the requirement of in-principle approval has been fulfilled and acted upon by the Govt. of Gujarat, also by the developer by acquiring possession of specific land parcel by paying part consideration to the land owner. It is his submission that the object and the purpose of permission granted under Rule 50(1)(e) of SEZ Rules, 2006 is for temporary storage as well as for RTF which are located within the additional land in respect of which in principle approval had been duly granted. It is his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmitted storage point in the DTA to another area in the DTA called Refinery Tank Farm (RTF) and used therein for construction of storage tanks. It is the Revenue's case that the permission granted under Rule 50(1)(e) of the SEZ Rules, 2006 did not permit the appellant-unit to remove the duty-free steel materials from the specified storage point to the RTF and also did not permit the appellant to utilize such materials in construction of storage tanks. It is these two actions which, according to the Revenue, led to a contravention of the permissions granted by the specified officer and consequently rendered the goods liable to duty and confiscation. 12. The first contention which has been urged on behalf of the appellant-assessee is that the additional area in the DTA within which the specified storage place and the RTF were located was finally notified to be a part of the SEZ. Though the notification in respect of such additional area was issued on 04.06.2007, it is the contention of the assessee that considering the scheme of the SEZ Act as well as the background facts, the said notification should be held as relating back to 19.04.2006 when the SEZ was first notified. If this co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Development Commissioner permitting them to set up a refinery in the notified SEZ. The SEZ developer had, in the meanwhile, started acquiring possession of additional land in and around the notified SEZ, with a view to expand the existing SEZ, as permitted in the in-principle approval granted on 31.03.2006. Necessary notification for acquisition of land under Section 4 of the Land Acquisition Act, 1894 was issued by the Government of Gujarat on 2.06.2006 and possession of 1813 Acres of additional land was therefore taken by the Developer after executing MoUs with the land owners. Having so acquired vacant possession of the additional land, the Developer submitted a letter to the Ministry of Commerce & Industry on 03.08.2006 seeking formal approval for the said 1813 Acres of land as Multi-product SEZ in continuation of the land notified for product specific SEZ. It is noted that for the reasons which have not been attributed to any fault of the appellant, there was a delay of nearly 10 months in notifying the said additional land of 1813 Acres. As mentioned above, the notification in respect of the additional land was issued on 04.06.2007. The said notification, however, stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inciple approval had been granted by the Ministry of Commerce on 31.03.2006 itself for including these locations within the SEZ. The arguments of the assessee's counsel in support of its contention that the notification dt.04.06.2007 should be held as relating back to 19.04.2006, are revolving around following:- a) The additional area was always intended to be a part of the SEZ, and an in principle approval to this effect had been granted by the Ministry of Commerce on 31.03.2006 while approving the original SEZ; b) The additional area could not be notified to be a part of the original SEZ in the first Notification dated 19.04.2006 only for the reason that the same had not come into assessee's possession till then. Pursuant to the in-principle approval dated 31.03.2006 of the Ministry of Commerce, the additional land was acquired by the State Government on 02.06.2006 and the assessee had, by 03.08.2006 executed MoUs with the land owners and acquired possession of the additional land; c) Even though the Developer submitted a formal application on 03.08.2006 for notifying the additional area to be a part of the SEZ, it took the Ministry of Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the Karnataka High Court in the case of Union of India v. Yokogawa Bluestar Ltd., 2001 (129) ELT 598, in fact dealt with a statutory Exemption Notification. 19. The assessee's arguments on this issue need to be seen in the context of the events leading to the issue of the Notification dated 04.06.2007. As stated above, the additional area which came to be notified on 04.06.2007 was always contemplated to be a part of the SEZ. The Approval which was accorded by the Ministry of Commerce on 31.03.2006, in terms thereof the SEZ was originally notified, also contained an in principle approval in respect of the additional area. Pursuant to this in- principle approval, the additional area was acquired by the State Government and possession thereof obtained by the assessee from its owners by 03.08.2006. The additional area therefore came into the assessee's possession well before the subject removals were effected. An application for formal Notification of the additional land was made on 03.08.2006, wherein the additional area was identified by giving particulars of survey Nos., etc. The Notification, however, took 10 months to be issued and all the removals in dispute were made duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have been notified and established in accordance with the provisions of this Act and the provisions of this Act shall, as far as may be, apply to such Zone accordingly: Provided further that the Central Government may, after notifying the Special Economic Zone, if it considers appropriate, notify subsequently any additional area to be included as a part of that Special Economic Zone. (2) After appointed day, the Board may, authorize the developer to undertake in a Special Economic Zone, such operations which the Central Government may authorize." (Emphasis provided) 21. Under sub-section (2), the Developer can be authorized to undertake authorized operations only after the "appointed day". The "appointed day" is even otherwise an important milestone in the SEZ Scheme, as the calculation of NFE (Net Foreign Exchange earnings) is required to be made from the "appointed day". This expression is defined in the SEZ Act in section 2 (a) in the following manner: "(a) "appointed day" with reference to a Special Economic Zone means the date on which the Special Economic Zone is notified by the Central Government under sub-Section (1) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be a small scale industry strictly and in accordance with the rules. However, once it is found that the industry qualifies as a small scale industry, in the matter of grant of exemption a liberal approach is permissible if it does no violence to the language of the notification. In a case of this nature it is only reasonable to take the view that the benefit of exemption will accrue to a unit found to be a small scale industrial unit from the date on which the application was made for grant of registration certificate. Such a unit should not be deprived of the benefit to which it is otherwise entitled as a small scale industrial unit merely because the authorities concerned took their own time in disposing of the application. We therefore, agree with the majority view of the Tribunal and hold that the benefit of exemption under the notification in question should be extended to the respondent with effect from the date on which the application for grant of registration was made by it before the competent authority. This is also in accord with the principle which found favour with this Court in State of U.P. & Anr. v. Haji Ismail Noor Mohammad & Co. and The Assessing Authority & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... area by the authorities on an application made by assessee on 03.08.2006, cannot come in way of extending the benefit of the concession as per the policy of Ministry of Commerce & Industry. 27. Following the judgment of the Hon'ble Supreme Court in the case of M.P.V. & Engg. Industries (supra), this Bench in the case of Zydus Mayne Oncology Pvt.Ltd. - 2010 (262) ELT 280 (Tri-Ahmd), had an occasion to consider a similar issue of SEZ unit. We would like to reproduce the entire judgment. "Appellants are manufacturing pharmaceutical products had applied for approval as a Special Economic Zone (SEZ for short) Unit vide their application dated 29-9-2006 to Kandla, SEZ Development Commissioner and Kandla SEZ notified on 28-9-2006. The Development Commissioner had approved the unit vide letter dated 27-10-2006. However, before the approval as SEZ unit, appellants had procured some excisable goods on payment of duty amounting to Rs. 87,403/- in respect of which they filed refund claim on 19-9-2007. The refund claim has been rejected by the lower authorities on the ground that the appellants obtained approval as SEZ unit only on 27-10-2006 and they were eligible for procuring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of SSI Units, even when the unit is recognized as SSI and certificate is issued by the State Governments sometime after lapse of more than six months, benefit is extended from the date of application made by the unit. In any case, if the unit is not recognized as an SSI unit or not approved as SSI Unit, the department has remedy of recovering the additional duty and in this case, by not granting the refund. The objectives of setting SEZ unit is to promote exports and the Government gives refund on the duty paid on inputs in respect of goods notified not only in respect of SEZ unit but also in respect of domestic units. SEZ unit can obtain goods without payment of duty but in the absence of status as SEZ approved unit they could not have got the same and hence they have obtained goods on payment of duty. Therefore, even if the refund is not strictly admissible on the ground that procedure was not followed, it is required to examine whether appellants were eligible in the normal course for the refund if the goods have been exported. The refund claim has been blindly rejected only after examining with respect to SEZ Act and procedure prescribed by the Government. In the absen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods to Domestic Tariff Area without payment of duty, namely: a) capital goods and parts thereof for repairs and return thereof; b) goods for display, export promotion, exhibition and return thereof; c) goods for job work, test, repair, refining and calibration and return thereof; d) laptop or notebook computers or video projection systems for use e) by authorized employees of a Unit or developer; f) any other goods with the prior approval of the Authorised Officer. (2) A Unit may transfer goods to Domestic Tariff Area or abroad for repair or replacement or testing or calibration, quality testing and research and development purposes under intimation to the Specified Officer and on maintenance of records for movement of such goods. (3) A Unit may transfer goods for quality testing or research and development purposes, to any recognised laboratory or institution, without payment of duty, on giving an undertaking to the Authorised Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f these facts, we cannot hold that the mere fact of moving the steel materials from a storage point in the DTA to another point in the same DTA or its use for construction activity should ipso facto deprive the assessee of the substantive benefit of duty exemption, particularly when the RTF was subsequently notified to be part of the SEZ and the goods were exclusively and entirely used for SEZ's authorized operation. The entire object and purpose behind Rule 50 (1) of the SEZ Rules, 2006 is to ensure that there is no mis-use or diversion of goods for purposes other than that of SEZ. In the instant case, it is not in dispute and the adjudicating authority has himself held that admittedly there was no diversion of goods for any purpose or use other than that of SEZ. On this ground also, and regardless of the view that we have taken with regard to the effective date of the Notification dated 04.06.2007, the demand for duty and the consequent action of confiscation and penalties cannot sustain. 33. Since we have held that the entire operation of the appellant was relatable back to the SEZ notification dated 19.04.2006, the impugned order confiscating the goods, levy of interest and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the SEZ Act, 2005 would be issued and in view of in-principle approval, would have retrospective effect; vii) Tremendous hurry to complete the project in time for which huge work force was mobilized and employed; viii) Payment of part of duty liability during investigations by the DRI; ix) Delay in approval of their SEZ from 03.08.2006 to 04.06.2007. This is also the period to which the show cause notice pertains. 37. We also take particular note of the fact that prior to the start of the investigation, the assessee had on their own, and as a matter of abundant precaution, filed as many as 11 Bills of Entry and paid duties on the steel items consumed for construction in the RTF. It is not in dispute that such payments were made by the assessee on their own volition and without any direction from the authorities. We have also taken note of the disclosures made by the assessee and the SEZ Developer in the various correspondences with the specified officers particularly the letters dated 03.08.2006 and dated 18.10.2006. One cannot also overlook the fact that upon notification of the additional area of the land, the assessee would have become ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of identified area and letter of approval (LOA). According to the provision of Section 3 of the SEZ Act, which prescribes the procedure for making a proposal to establish SEZ, the identified area is the area which is identified by the person for setting up SEZ. Therefore according to Section 3, a developer is required to identify the area and thereafter make the proposal either directly or through the State Government. This proposal will be considered by the Board for approval of SEZ. Sub-section (8) of Section 3 of the SEZ Act empowers the Central Government to prescribe the minimum area of land and other terms and conditions subject to which the Board can approve, modify or reject any proposal for establishing SEZ. Therefore once the proposal is received by the Board, the Board may approve the proposal with modification or without modification and forward the proposal to the Central Government. Thereafter the Central Government shall issue a LOA on such terms and conditions, obligations and entitlements. According to sub-section (13) of Section 3, once the LOA is granted to a developer, subject to the provisions of the Section, the developer may allocate space or build up area o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are required to be accepted in writing. Only thereafter the notification is issued. 47. Another aspect that is very important to be taken note of is that the LOA is a communication from the Government to the developer whereas a notification is a public document and once a notification is published in the gazette according to the statute, it means the public is informed of the contents of the notification. 48. The discussion above would show that while the term "appointed day" is relevant for identifying an SEZ with reference to the first notification issued, whether a particular unit is located in the SEZ or not and whether it can be considered as an SEZ unit or not would depend upon the actual approval and the notification issued by the Government covering the land also. On the appointed day, no doubt an SEZ would have come into existence but as regards the land on which the SEZ has been established and the area covered by the SEZ are determined by the notification issued by the Government giving the details of the land. It has to be noted that in this case the notification issued on 19/04/2006 notified a Sector Specific Special Economy Zone (SSSEZ) for petroleum and petro-ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Government is satisfied that the requirements of sub-section 8 Section 3 of SEZ Act have been fulfilled by the developer and terms and conditions have also been fulfilled. This is the reason why the notifications specifically mention the date and fact of grant of LOA and developer's name to whom it was approved and the nature of SEZ. 51. The above discussion would clearly show that the appointed day with reference to an SEZ on which the appellants relied upon extensively would not help them at all. In this case, the appointed day for the establishment of SSSEZ was" on 19/04/2006 and the appointed day for establishment and coming into existence of Multi-product SEZ was 04/06/2007. It may be noted that this interpretation would be harmonious with the provisions of law and would not result in any anomalous situation. 52. Any other interpretation would result in anomalous and unwanted and unacceptable situation. If the claim of the appellants is accepted, let us assume a situation where after a period of 3 years or 4 years or subsequently, the Government comes to the conclusion that the developer did not fulfill the terms and conditions and did not deserve the land on wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n missed is the fact that the in-principle approval for expansion into Multi-product SEZ as and when the minimum area of 1000 hectares is acquired by the developer. Therefore in-principle approval will come into effect only as and when the minimum area is acquired. 55. Another ground canvassed by the appellants is that there can be only one appointed day for an SEZ, even if this contention is accepted, in this case, the Multi-product SEZ came into being only on 04/06/2007 and not before. Prior to that there was a SSSEZ. This was converted into Multi-product SEZ on 04/06/2007. Therefore the appointed day for the purpose of units other than petroleum and petro-chemicals would be 04/06/2007 for petroleum and petro-chemicals sector, the appointed day has to be treated as 19/04/2006. It was not merely adding additional area to the SEZ that was involved in this case. The process involved fulfillment of requirements and terms and conditions of Multi-product, multi-sector SEZ and identifying the additional area and fulfillment of requirements relating to the same and further in this case Reliance Infrastructure Ltd. also got the permission of transfer to M/s. Reliance Jamnagar Infrastruct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts that the issue needs to be seen in the context of events leading to the issue of notification dt. 04/06/2007 and the appellants' conduct during the period from 19/04/2006 to 04/06/2007. 59. It was submitted that the appellants had acquired possession of the additional area from the owners by 03/08/2006. This submission of the appellant has been accepted by the learned brother. During the hearing, our attention was drawn to the letter dated 03.08.2006 to support the Claim that the additional area was acquired by the State Government and possession was obtained by the assessee from the owners. Our attention was drawn to para 7, 9 and para 11 of the letter which are reproduced below: "7. RIFL is now in possession of 1813 acres of land (Additional Land) as given below: Sl. No. Details Land Area (Acres) 1 Land on 21 years lease with RIFL 395 2 Private and Government landing in possession with RIFL as on date title being transferred to RIFL 1418 3 Total 1813 9. Out of the total Additional Land of 1813 acres, 1000 acres would be allotted to RPL as the unit in the SEZ and the balance is required by the developer, M/s. RIFL for setting up infrast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants is not correct. 61. Further it is an admitted fact that the Gujarat Government had issued a notification for acquisition of land on 02.06.2006. I have considered the provisions of Gujarat Land Acquisition Act. As submitted by the appellants, the notification under Section 4 of Land Acquisition Act 1984 was issued on 02.06.2006. According to Gujarat Land Acquisition Act, after the notice is issued under Section 4, one month time is required to be given to raise objections, if any, from the persons interested. Such objections have to be heard and decisions taken. After considering all the objections and after giving objectors opportunity of being heard and making such further enquiry, the collector is required to submit a report. This report can be sent only after two months from the date of notification since the notification requires one month time to be given for receipt of objections and one more month for deciding on objections. Only after these statutory obligations are completed as required under Section 4 and Section 5A, declaration of intended acquisition can be issued by the Government as per the provisions of Section 6 of the Land Acquisition Act. The section prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fact the appellants have not given the details as to when exactly the land acquisition was completed by Gujarat Government and when the land was handed over to them officially. They have also not indicated when exactly they took the decision for transferring approval to Reliance Jamnagar Infrastructure Ltd., when they intimated of this to the Government and on what basis the request was made and when exactly they got the new company registered which applied for transfer etc, etc. The next paragraph of the notification clearly shows that the conversion also had to be formally approved before notification was issued. Such formal approval was granted on 09.05.2007. It has to be noted that in the first instance also, the letter of approval was issued on 31.03.2006 and notification was issued on 19.04.2006. Notification of converted SEZ was issued on 04.06.2007. Therefore both the claims made by the appellants that land acquisition was over and land had come into their possession on 03.08.2006 and they could not be faulted for delay in approval are wrong. Further the letter dated 03.08,2006 also clearly shows that the appellants knew that they would require a formal notification. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase the area was neither SEZ nor there is evidence to show that unit had already been approved. Therefore this decision would not apply. In the case of Yokogawa Bluestar Ltd., both department and the assessee had believed that assessee was eligible for the benefit. That is not the situation here. In this case there is a clear dispute between the department and the assessee. Moreover in that case the gap was unintended. In this case the notification could be issued on 04.06.2007 after the completion of acquisition of land, approval of transfer of permission to RJIL. Therefore the delay in notification cannot be laid at the door of the Government and the letter written by the appellant on 03.08.2006 cannot be considered as one which had been written after completing all obligations required under the law. In the case of Zydus Mayne Oncology Pvt. Ltd. also, the unit was located in SEZ and was eligible for all the benefits at the time when the application was made to the development Commissioner. Therefore that case was similar to the case which was under consideration before the Hon'ble Supreme Court In the case of M.P.V. & Engineering Industries, None of the decisions cited by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and fulfilled. The storage tanks were still under construction on 04.06.2007 when additional land was notified to be part of the SEZ. Moreover it was also contended that the appellants had intimated the Ministry of Commerce that construction activity was proposed to be undertaken and in their letter dated 18.10.2006 also they had intimated that construction activity was being undertaken. It was also submitted that assessee had filed as many as 11 bills of entry and therefore it cannot be said that specified officer was not aware of this. In my opinion on the basis of these facts and on the basis of facts observed above, we cannot sustain the claim made by the appellants. First of all from the evidence adduced in the show-cause notice through documents and statements of co-persons of RPL it is clear that when the goods were actually received from the SEZ no customs duty was paid. This has been clearly brought out from the following extracts of the statements of Shri Pushpak K. Patel, Senior Manager of M/s. RJIL. "x) Normally all the goods were entered and removed after making necessary entries in the records maintained by security check-posts, but in the case of remov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the stores department the stock of the material were identified by the stores for availability. They then sent to his department the list of material required to be cleared. The goods could be cleared to the contractors only after filing bill of entry with the SEZ Customs, assessment by the SEZ Customs officers and payment of applicable duty, if any, as explained by him in his earlier statement dtd. 27.06.2007 regarding clearance to DTA. x) This procedure was not followed by them in respect of the clearances of goods to the construction site of the contractors in the RTF area prior to 04.06.2007. The goods were cleared to the construction site of the contractors in the RTF area on the basis of either an Internal Gate Pass or an Inter Site Material Transfer Gatepass issued manually by the stores department and in these cases no duty was paid at the time of clearance of the goods to the RTF area. In respect of these clearances to the contractors in the RTF area they used to file bill of entry periodically on consumption of materials/goods based on the construction forecast and progress reports received from the contractors and paid the applicable duty on these goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anchnama dated 07.06.2007 that "once the Duplicate copy of the assessed Bill of Entry arrives at Cargo-1 Gate then the Steel Plates would be loaded size wise into truck and the examination of which would be done at the Cargo-1 Gate by the officers of Customs". However, he was subsequently informed by Shri V.K. Gandhi, Senior Vice President (Non Technical) that the bill of entry was only far facilitating payment of duty and that the goods were already cleared to the RTF area. xvii) The first bill of entry No. 447 for clearance of goods to the RTF area was filed by them on 11.12.2006 showing clearance of 354.39 MTs of Structural Steel, 2634.98 MTs of TOR Steel and 5560.26 MTs of Steel Plates. They had paid total Customs duty of Rs. 5,55,63,127/- in respect of the clearance shown under the said bill of entry, The goods under bill of entry no. 447 dated 11.12.2006 were already cleared under Internal Gatepass/Inter Site Material Transfer Gatepass issued by the Stores department on various dates prior to 11.12.2006. The quantity of goods shown in the said bill of entry was arrived at by them on the consumption of goods based on the construction forecast and progress reports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uirement leads to severe consequences, such requirement would be mandatory. It is the cardinal rule of the interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is also settled rule of interpretation that where a statute is penal in character, it must be strictly construed and followed. Since the requirement, in the instant case, of obtaining prior permission is mandatory, therefore, non-compliance of the same must result in canceling the concession made in favour of the grantee-the respondent herein". 73. Another fact that has not been brought out clearly is the fact that appellants had paid only about Rs. 13 crores till the case was registered against them which is much less than more than Rs. 49 crores which was confirmed subsequently out of which more than Rs. 44 crores was paid. Subsequently portion of this amount was paid after the visit of DRI officers. This would also show that even when the appellants believed that duty liability was to be discharged, they filed bill of entry belatedly, manipulated records and did not pay the full amount of duty and did not pay at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the goods were brought into DTA without payment of duty by the appellants and, therefore, the jurisdiction has to be examined with reference to the action of the appellants and whether the jurisdiction was available to the Customs officer in India, i.e. DTA. 77. Further, SEZ is also a warehousing station. Therefore, any goods cleared from SEZ to DTA is treated as deemed import in terms of Rule 34 of the SEZ Rules since the DTA buyer requires an import licence for obtaining goods from SEZ. Therefore, Section 12 of the Customs Act comes into play at the time of clearance from the goods from SEZ to DTA. Consequently, for further action i.e. recovery of Customs duty and interest, Sections 28 & 28AB are automatically attracted. 78. I also find the submissions regarding Sections 20, 21 & 22 of the SEZ Act, 2005 by the learned special consultant appropriate. According to the instructions dated 2.8.2006 issued by Ministry of Commerce and Industry, Government of India, "the provisions of Sections 20, 21 & 22 of the SEZ Act related to single agency or single enforcement officer and inspection, search, seizure, etc. have not yet been operationalised. Hence so long as these sections are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the conversion of SEZ to Multi-products Special Economic Zone. It was argued by the appellants that once additional area was notified, the whole area become SEZ and it was the submission that the whole area has to be treated as SEZ from 19.4.2006 which I have already held that the same cannot be accepted. Nevertheless, as on 4.6.2007, it has to be held that the whole area was SEZ. Therefore, the duty demand for the steel, etc. brought for construction beyond the storage area which has already been sustained with interest can be upheld but the confiscation of the goods lying in the SEZ on 4.6.2007 cannot be sustained because as on that date, the area had already been notified as SEZ and therefore, the goods were lying in SEZ at the time of seizure. It cannot be said that on that day these goods were found in DTA. No doubt, because of non-operationalised of exercised jurisdiction. But it cannot be forgotten that the Development Officer could have regularized such removals made earlier by exercising his power. It has been consistently held by this Tribunal that in the case of EPCG imports and DEEC imports etc., for procedural omissions for e.g. the period for fulfillment of export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a view that no penalty is imposable. 82. The next issue to be considered is whether penalty under Section 114A should have been imposed by the Commissioner. I have already taken a view that it cannot be said that there was an intention to evade duty in this case. In such an event, penalty under Section 114A cannot be imposed. Therefore, penalty under Section 114A cannot be sustained and the appeal filed by the Revenue on this aspect has to be rejected. 83. The learned Member has also taken a view that entire demand is time barred. On going through the records, I find that the appellants have not raised this issue at all. Moreover, information available is not sufficient to reach any conclusion. Nevertheless it has to be noted that goods were cleared under bond and, therefore, time limit under section 28 would not apply as submitted by the learned special consultant. 84. In view of the above discussion, in my view, the matter has to be remanded to the original adjudicating authority for limited purpose of quantifying the duty demand and interest thereon in respect of the goods cleared prior to 4.6.2007 and used for construction of RTF and taken out of permitted storage area. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emanded as held by Member (Judicial). 2) Whether Customs officer have jurisdiction to investigate the case and demand duty as held by Member (Technical) or the issue is irrelevant and need not be considered as held by Member (Judicial). 3) Whether the appellants can be said to have violated the terms of permission granted for storage of steel items by removing for construction as held by Member (Technical) or they cannot be said to have violated the conditions as held by Member (Judicial). 4) Whether limitation as a ground was not raised by the appellants and the same need not be considered as held by the Member (Technical) or needs to be considered as held by Member (Judicial). 5) Whether demand can be said to be barred by limitation as held by the Member (Judicial) or demand is not barred by limitation as held by Member (Technical). 6) Whether the matter is required to be remanded for requantification of duty as held by Member (Technical) or no duty is to be demanded as held by Member (Judicial). 86. Brief facts and the issue involved in these appeals are outlined in Para 2 of the order written by Member (Judi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted day' when the first notification dt.19.04.2006 was issued because second Notification No.S.O.873(E) was issued on 4.6.2007, was in continuation of Notification No.S.O.568(E) issued on 19.4.2006. Detailed written submissions were also made by both sides before me during hearing. 88. Point No.1 "Whether duty is payable on the goods removed from SEZ and permitted storage area to the additional area for construction by the appellants with interest under Sections 28 & 28AB of Customs Act, 1962 as held by Member (Technical) or duty cannot be demanded as held by Member (Judicial)." 88.1 The provisions regarding removal of goods from SEZ area to the Domestic Tariff Area (DTA) have been made under Section 30 of the SEZ Act, read with Rules 47 to 51 of the SEZ Rules, whether such removals to DTA should be on payment of duty or without payment of duty under 'Authorized Operations', Rules 47 to 49 of SEZ Rules 2006 provide for clearance of goods to DTA sales on payment of duties. Rules 50 and 51 of the SEZ Rules talk of temporary removal of goods to DTA without payment of duty subject to following the prescribed procedure and prior approval of the 'Authorized Officer'. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o another class of SEZ. It was his case that appellants were also permitted above conversion only under Rule 5(2)(d) of the SEZ Rules 2006. 88.3.1 In the present appeals, the period of demand is from April 2006 to June 2007 and according to the Special Counsel appearing on behalf of the Revenue, there was no provision for conversion of one category of SEZ to another category of SEZ before 16.3.2007. However, there is a force in the argument of the appellants that any additional land added to the SEZ under Section 4 of the SEZ Act will be considered as addition of land to the existing SEZ only. When the concerned Ministry implementing SEZ Act 2005 was taking up the appellant's case for change from one category of SEZ to another, it cannot be said that there was no provision in allowing such conversion before 16.3.2007 when Rule 5(2) (d) was introduced. It is further observed from the very first application dt.22.8.2005, made by the appellant to the Ministry of Commerce & Industry that there was a proposal from the appellant for setting up of a multi-product zone which was permitted by the concerned Ministry for initially setting up of a SEZ for Petroleum & Petro-chemical Sector ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our existing SEZ area, which will be shortly notified as an area of our SEZ, A formal notification declaring the area as part of our SEZ is being awaited, As we are short of storage place in the existing declared area, we propose to store our goods in the newly acquired area and carry out construction activities for utilizing the same for authorized operations in our SEZ." 88.4.1 Office of the Specified Officer vide F.No.VIII/48-4/Cus-T/2005-Pt.I dt.18.10.2006 necessary permission under Rule 50(1)(e) of the SEZ Rules, 2006 with the following conditions:- 1) The permission is granted for 4 months from the date of issue. 2) Before storage, the Authorized Officer should make sure the safety/security of the proposed storage place. 3) Double duty Bond should be executed. 4) Procedure under Rule-51 of the SEZ Rules, 2006 should be followed. 5) The Authorized Officer should have close visit on in and out of the above goods. 6) The goods should be first received in SEZ and then it may be removed to storage. 7) If the assessee fails to bring back the goods within stipulated time, the same shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eys that in the event of any inconsistency in the provision of any other law/instrument and the provisions of the SEZ Act 2005 the provisions of SEZ Act 2005 shall prevail. Under the above facts and circumstances, the issue raised by the Special Counsel on behalf of the Revenue that by virtue of Instructions dt.3.8.2006 issued by Ministry of Commerce & Industry, Govt. of India, the provisions of the Customs Act, 1962 will be applicable in the present case will not be the correct interpretation of law. It is observed from Section 27 of the SEZ Act 2005 read with the Second Schedule to the SEZ Act, that provisions of the Income Tax Act, 1961 have been made applicable to the SEZ Act with certain modifications. Further, Section 57 of the SEZ Act, read with the Third Schedule of the SEZ Act, provide for applicability of certain other enactments to the SEZ Act 2005 from a notified date with certain modification. No provision exists in the SEZ Act 2005 for making the provision of the Customs Act, 1962 applicable to the working of Special Economic Zones under the SEZ Act 2005. In the absence of any clarification from the Commerce Ministry on Instructions dt.3.8.2006 is possible that the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nomic Zone developer and units are implemented through various notifications and circulars issued by the concerned Ministries/Departments. The present system, therefore, does not lend enough confidence for investors to commit substantial funds for development of infrastructure and for setting up of the units in the Zones for export of goods and services. In order to give a long term and stable policy framework with minimum regulatory regime and to provide expeditious and single window clearance mechanism, a Central Act for Special Economic Zones has been found to be necessary in line with international practice. To achieve this purpose, a "Special Economic Zones Bill, 2005" is proposed. The salient features of the Bill are as under:- (i) matters relating to establishment of Special Economic Zone and for setting up of units therein, including requirements, obligations and entitlements; (ii) matters relating to requirements for setting up of off-shore banking units and units in International Financial Service Center in Special Economic Zone, including fiscal regime governing the operation of such units; &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from SEZ and to monitor the performance of the Developer and the units in the SEZ. In the absence of any consultation done by the Revenue with the SEZ authorities and no action taken by the SEZ authorities under the SEZ Act 2005 holding that operations undertaken by the appellants were not 'Authorized Operations', no duty and interest on the goods removed from SEZ to permitted storage area or additional area for construction, can be demanded from the appellants under Section 28 & 28AB of Customs Act, 1962. As already opined, Notification No.S.O.873(E), dt.4.6.2007 will relate back to 19.4.2006 when Notification No.S.O.568(E) was issued. Accordingly, I agree with the interpretation taken by Member (Judicial). 89. Point No.2:- "Whether Customs officer have jurisdiction to investigate the case and demand duty as held by Member (Technical) or the issue is irrelevant and need not be considered as held by Member (Judicial)." 89.1 The jurisdiction of a Customs officer to investigate and demand the duty from the appellants has to be examined in the light of the provisions contained in the SEZ Act 2005, read with the SEZ Rules 2006 and the provisions of the Customs Act, 1962 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods received in SEZ are clandestinely cleared without the knowledge of the appropriate authorities created under the SEZ Act 2005, there could be a jurisdiction for investigating agencies of the following enactments, as per Rule 25 of the SEZ Rules 2005, either in consultation with SEZ authorities or without any consultation:- (a) The Customs Act, 1962. (b) The Customs Act, 1975. (c) The Central Excise Act, 1944. (d) The Central Excise Tariff Act, 1985. (e) The Central Sales Tax Act, 1956. (f) The Foreign Trade (Development & Regulations) Act, 1962. (g) Finance Act, 1994. (h) Other enactments specified in the First Schedule to the SEZ Act 2005. 89.2 From the above observations, it can be safely concluded that for any removals of the goods from SEZ area to DTA or within SEZ area under intimation/approval of the appropriate authorities, if not properly accounted for or not brought back within the stipulated period, adequate recovery machinery exists under the SEZ Act. 2005 and SEZ Rules 2006 to recover Customs/ Central Excise dues. Accordingly, for all the situations ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd intimations to the appropriate authorities under the SEZ Act, Customs Officers had no jurisdiction to investigate this case and demand duty under Customs Act, 1962 when the entire proceedings relate back to 19.04.2006. I agree with the view taken by Member (Judicial) that the issue becomes irrelevant and need not be considered being so obvious for the observations made above. 90. Point No.3: "Whether the appellants can be said to have violated the terms of permission granted for storage of steel items by removing for construction as held by Member (Technical) or they cannot be said to have violated the conditions as held by Member (Judicial)." 90.1 In view of my detailed observations given in Paras 88.4, 88.5, 88.5.2, 88.5.3, 89.1, 89.2 and 89.3 above, removal of goods from SEZ area to DTA and operations thereon were undertaken by the appellants under due approvals/intimation of the appropriate authorities supervising the appellants under the provisions of the SEZ Act 2005 and SEZ Rules 2006. All the operations done by the appellants have to be considered as 'Authorized Operations' under the SEZ Act 2005 and the 'Raids made thereunder, in view of the fact that No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 114A penalty has also held by Member (Technical) to be not imposable. Accordingly, it was argued that once there was no intention to evade duty and Section 114A penalty is held to be not imposable, extended period under Section 28 of Customs Act, 1962. 92.1 I have considered this issue. This point of difference is left to be considered only for academic discussion because it is already opined that in the existing facts and circumstances, provisions of the Customs Act, 1962 are not applicable. Once a view is taken that there is no intention to evade any duty on the part of the appellants, by not invoking the penal provisions, it has to be held that extended period of limitation cannot be invoked in such situations. Alternately, Member (Technical) has also observed in Para 83 of his order that appellants have cleared the goods in DTA under a Bond, therefore, time bar under Section 28 of the Customs Act, 1962 will not apply. It is evident that Member (Technical) is referring to Bond-cum-Legal undertaking in Form-D, required to be given by the Developer under Rule 22(1)(ii) and Proviso to Rule 22(1) of the SEZ Rules 2006, as no other Bond executed by the appellants with the Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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