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TMI Blog2022 (5) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... on to seize goods though found outside SEZ area but in relation to a SEZ unit? - HELD THAT:- A reading of Section 53 of Customs Act, provisions makes it clear that the Customs authorities (DRI officials) have no power or jurisdiction to inspect or seize goods in respect of units situated in SEZ area. The power to investigate in respect of any offence committed in SEZ unit is conferred on Officers empowered under Section 22 of the SEZ Act - the Central Government in exercise of powers conferred under Sections 21 and 22 of the Act issued a Notification dated 05.08.2016, authorizing the Additional Director General, Directorate of Revenue Intelligence to investigate into offences under Customs Act committed in a SEZ - But, the same cannot be invoked in the instant case as the alleged violation was prior to 2016. Whether the property can be said to be in Special Economic Zone? - HELD THAT:- The fact that the goods were imported from U.S.A. is not in dispute. Even assuming that the goods imported were not subjected to physical process in view of the report of the Analyst, but, as observed by us earlier, the petitioner has licence to import and trade in Bio Diesel as well, which fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Writ Petition came to be filed to declare the Order in - Original No.VIZ-CUSTOM-000-COM-009-20-21, dated 30.06.2020, passed by the 1st respondent pursuant to the reply given to the Show Cause Notice dated 11.12.2014, as illegal, arbitrary and without jurisdiction. 2. The circumstances, which lead to filing of the present Writ Petition, are as under:- (a) The 1st petitioner is a private limited company engaged in manufacture of Bio-Diesel and Glycerine at Visakhapatnam Special Economic Zones (VSEZ). It was registered as a unit of Special Economic Zone (SEZ) with Visakhapatnam Special Economic Zone (VSEZ) vide Letter of Approval (LOA) dated 17.05.2006, granted by the Board of Approvals (BOA), New Delhi, for conducting authorized operations of manufacture of Bio Diesel and Glycerine. The Commerce Ministry issued another LOA dated 30.07.2009, allowing trading in Bio Diesel, as an authorized operation, by the 1st petitioner. (b) It is seen from the Statement of Objects and Reasons of the Special Economic Zones Act, 2005 [for short, the Act ], the Government of India has announced the Special Economic Zone scheme in April, 2000 with a view to provide internationally competit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esel of different grades manufactured at the factory situated in VSEZ. (e) The petitioner imported four consignments by duly filing Bill of Entries, transferred and stored the material in the Bonded Warehouse of M/s.East India Petroleum Ltd (EIPL) at Visakhapatnam. It is also to be noted that the petitioner transferred the Bio Diesel manufactured at VSEZ factory to EIPL Bonded Warehouse after filing Shipping Bills for blending with imported FAME and after due process the petitioner exported the blended cargo from the bonded warehouse. Bio Diesel is also called as Fatty Acid Methyl Ester (FAME). The main raw materials for manufacture of Bio Diesel are vegetable acids, vegetable oils, fatty acids and also fatty acid methyl ester (FAME) which are imported from Malaysia, Indonesia and the U.S.A. as well as domestically procured material. (f) The petitioner imported 42,137.424 MTs of FAME and imported consignments and blended it with 6,022.762 MTs of Bio Diesel manufactured by it to export the blended Bio Diesel as per the specifications of its clients. Since the petitioner does not have sufficient storage capacity to store huge quantity of bio diesel imported, in some cases, blen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the order without application of mind. 3. The main plank of argument is that the respondent no.2 had no jurisdiction to initiate any action against a unit situated in SEZ as the offences under the Customs Act are not yet notified to be investigated by the DRI and any offence in a SEZ unit are to be dealt with only by the Development Commissioner under the SEZ Act i.e. respondent no.3. Hence, issuance of show cause notice is bad in law. 4. Counters came to be filed by the respondent nos.1 and 2 denying the allegations made in support of the affidavit filed in the Writ Petition, mainly contending that the petitioner has admitted that he has filed wrong declarations in Form-A for issue of GSP Country of Origin (Preferential) obtained from Development Commissioner of VSEZ and Export Inspection Agency (EIA) that the product under export is a product of Indian Origin. It is averred that the mis-declarations of the values, Country of origin, slight change in the descriptions of the same product and routes etc., by the petitioner are clear indications of the modus operandi adopted and there is enough material available which confirm that no manufacturing activity took place and VS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptions to the rule of alternate remedy arise where : (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged. 27.4. An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law. 27.5. When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion. 27.6. In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od of five years from the date of commencement of production/service activities. For this purpose, you shall execute the bond-cum-Legal Undertaking as prescribed under the Special Economic Zone Rules, 2006. II. You shall fulfill the pollution control requirements, as may be prescribed by the pollution Control authorities. * * * F.No.9/VSEZ/187/VSEZ/2006/9422 Dated 30th July, 2009 To M/s.Cleancities Biodiesel India Ltd., Phase-II, Special Economic Zone (VSEZ), Duvvada, Visakhapatnam 500 049. Sub:LOP No.9/VSEZ/187/VSEZ/2006/ dated 17.05.2006 issued for manufacture of Biodiesel and its Bi-product Clycerin Amendment of LOP Inclusion of Trading Activity in the LOP Regarding. * * * Sirs, I am directed to refer to your letter dated 29.07.2009 on the subject mentioned above and to convey the approval of the Development Commissioner, Visakhapatnam Special Economic Zone for amendment of LOP including Trading of Biodiesel and Blended Biodiesel. All other terms and conditions stipulated in the Letter of permission No.9/VSEZ/187/VSEZ/2006/ dated 17.05.2006 shall remain unchanged. Please keep this letter attached ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Standing Counsel for respondent nos.1 to 3 and Sri N. Harinath, learned Assistant Solicitor General for respondent no.4 fairly stated across the Bar that if the alleged violations is in SEZ, the respondent authorities have no jurisdiction to issue the Show Cause Notice, as the amendment authorizing the Customs Officer to deal with violation in SEZ area came into effect in the year 2016. 18. In order to find out as to whether the DRI Officers have jurisdiction to seize the goods imported by a unit situated in SEZ, it would be just and proper for us to refer to certain undisputed facts, which are as under:- (i) The Writ Petitioner has licences to trade (import export) and also to import, treat the product and then export. This aspect is not in dispute. (ii) The fact that the product is not stored in SEZ area, is also not in dispute. (iii) The fact that the product imported is not in dispute. (iv) It was stored in a Bonded Warehouse of M/s.East India Petroleum Ltd. (EIPL), Visakhapatnam near the port for export. (v) The fact that enough space is not available in SEZ area to store the imported product is not in dispute. (vi) The fact that it was imported for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any offence committed in SEZ unit is conferred on Officers empowered under Section 22 of the SEZ Act. 22. Further, section 52 of the Act also spells out that the Customs Act is not applicable in respect of units situated in SEZ unit. It would be appropriate to extract Section 52 of the Act, which is as under:- 52. Certain provisions not to apply.-(1) The provisions contained in the Chapter XA of the Customs Act, 1962 (52 of 1962) and the Special Economic Zones Rules, 2003 and the Special Economic Zones (Customs Procedure) Regulations, 2003 made thereunder shall not, with effect from such date as the Central Government by notification appoint, apply to the Special Economic Zones. (2) Notwithstanding anything contained in sub-section (1), all offences committed, before the commencement of this Act, under any provisions of the Customs Act, 1962 (52 of 1962) and the Special Economic Zones Rules, 2003 and the Special Economic Zones (Customs Procedure) Regulations, 2003 made thereunder, shall continue to be governed by the said Act or rules, as the case may be. (3) Anything done or any action taken or purported to have been done or taken including any rule, notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e enforcement officer (s) in respect of any notified offence or offences committed or likely to be committed in a Special Economic Zone. The enforcement officer(s), for the reasons to be recorded in writing, may carry out the investigation, inspection, search or seizure in the Special Economic Zone or Unit and shall intimate the details of any action initiated under sub-section (3) of section 21 of the Act to the Joint Secretary in charge of Special Economic Zones Division in the Department of Commerce immediately and in any case not later than seven days of initiation of any action. But, the same cannot be invoked in the instant case as the alleged violation was prior to 2016. 25. An objection came to be raised by Sri N. Harinath, learned Assistant Solicitor General that the issue raised by the learned Senior Counsel for the petitioners with regard to jurisdiction is pending adjudication before the Hon ble Apex Court in M/s.Mangali Impex vs. Union of India. But after going through the judgment of the Delhi High Court, against which an appeal is preferred before the Hon ble Apex Court, we feel that the issue therein relates to validity of Section 28(11) of the Customs Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Economic Zone in one consignment, the Specified Officer may allow the export of such cargo on execution of a Bond for the duty involved subject to the condition that the Unit shall submit the proof of export within ninety days of removal of such cargo under Bond, failing which applicable duty on the goods not exported shall be payable in terms of the Bond . 30. A reading of the above makes it clear that the passage of goods from SEZ to a Port has to necessarily take place for the purpose of export, more so, when there is no enough space for storage of these goods in SEZ area, which is also an admitted fact. Merely, because, the goods were taken out from SEZ area to be transported to Port or to a storage unit before they are exported cannot be brought within the purview of Customs authority. 31. As seen from the record, in the show cause notice, it is alleged that insofar as consignment exports in the years 2009-10, there was no movement of goods from SEZ to outside SEZ. Learned Senior Counsel for the petitioner placed material on record to show that in respect of such consignments, Development Commissioner of Visakhapatnam, SEZ initiated proceedings under the SEZ and impose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the goods from SEZ area or storage of goods in bonded warehouse for the purpose of export, imported under a licence issued for the said purpose as and when vessel is available or otherwise, in our view, cannot be brought within the purview of DRI officials under the Customs Act and it is only officials under SEZ Act, who would be bestowed with jurisdiction to initiate the proceedings. 34. At this stage, Sri N. Harinath, learned Assistant Solicitor General and Sri Suresh Kumar Routhu, learned Standing Counsel took us to the answers given to question Nos.28 and 29 by the petitioner when he was examined by DRI officials to show that the petitioner has violated the provisions of the Customs Act and the terms of the licence. But, the answers to questions 34 and 35 would clearly indicate that the documents were filed before the concerned at the time of export and the goods were moved from SEZ and the shipping bills were filed before the concerned in respect of the goods which were to be exported/ moved out of SEZ area, for loading. It would be appropriate to refer to the same. Q.34) What are the documents submitted to Customs/SEZ authorities at the time of export of goods by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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