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TMI Blog2023 (1) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... arch carried by them. The CESTAT reasons that when two interpretations are possible, the interpretation favourable to a taxpayer must be accepted is entirely out of context. Jurisdiction, in fact, or law, irrespective of the nature of the enactment, has different manifestations. In the case on hand, the search and seizure have occasioned in DTA. Therefore, the Officers of the Customs Department, vis- -vis the alleged illegality noted against both the importer and the individuals who handled the gold moved out of SEZ, have jurisdiction under Act 1962. The denial of jurisdiction to the Officers of the Customs Department for offences or violations noticed in DTA would enhance the area of an SEZ and diminish the jurisdiction of the Act 1962. There are two aspects for independent and objective consideration: search and seizure in DTA and, conversely, an investigation into commissions or omissions in an SEZ. The circumstance is that 4 Kg of gold was imported by the AGPL/importer when it had authorization and permission. The imported gold was lying in an uncleared area at the Air Cargo Complex at Nedumbassery, Cochin Airport. Stock, goods or gold lying in an uncleared area cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs, Cochin Special Economic Zone, Kakkanad, Cochin, for taking out gold imported for job work in a Domestic Tariff Area (for short, DTA). On 14.03.2013, the Office of Development Commissioner of SEZ accorded permission to the importer to move or take out gold imported for job work in the specified DTA. The crucial conditions in the authorization to take out the gold from CSEZ read thus: (i) permitted to remove 50 Kg of gold to M/s. Mahavishnu Industries, 547/A, First Floor, Perumpally P O, Mulanthuruthy, (ii) the total quantity removed shall be brought back to the importer s unit along with the waste generated, if any, during the course of the sub-contract within 120 days, and (iii) the permission is valid for one year from 14.02.2013. The permission stood expired by 13.02.2014, and the importer makes an effort to canvass that the importer has applied for permission or sought renewal and, therefore, any finding recorded on the movement of gold from CSEZ to any place within the DTA beyond 13.02.2014 is legal. The case of the importer alone is referred to at this stage, and at a later stage of our judgment, we will express our view on these averments of the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 111(b), (j), ( k) and (o) of the Customs Act, 1962. vi. the 1075.317 gms. of gold articles seized from M/s. Leo s Angel Gold, Trichur should not be confiscated under the provisions of Section 111(b), (j), (k) and (o) of the Customs Act. 1962 vii. the amount of Rs. 2.85 crores lying with M/s. Joyalukkas (I) Pvt Ltd., being the sales proceeds of 10 kgs. of smuggled gold purchased from Shri. Sanjay Subrao Nikam, should not be confiscated under the provisions of Section 111(b), (j), (k) and (o) read with Section 121 of the Customs Act, 1962. viii. the 4 kgs. of gold bars lying at the Air Cargo Complex Nedumbassery being imported into a non-existing unit and with the intention of diverting into the Domestic Tariff Area should not be confiscated under the provisions of Section 111(d) and (o), of the Customs Act, 1962. ix. penalty should not be imposed on M/s. Ashwin Gold Pvt. Ltd., and its Managing Director Shri. Sanjay Subrao Nikam. under the provisions of Section 112 (a) and 114A of the Customs Act, 1962 and x. duties of Customs amounting to Rs. 30,86,721/- on the quantity of 11186.325 grams of imported gold bars diverted from their unit and not so far re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... richur was called upon to Show cause as to why :- i. the 4581.581 grams of gold articles seized from M/s Ajay Co Trichur should not be confiscated under the provisions of Section 111(b), (j), (k) and (o) of the Customs Act. 1962; ii. penalty should not be imposed on them under the provisions of Section 112 (b) of the Customs Act, 1962. 75. M/s. Leo's Angel Gold, Trichur was called upon to Show cause as to why: i. the 1075.317 grams of gold articles seized from M/s. Leo's Angel Gold. Trichur should not be confiscated under the provisions of Section 111(b), (j), ( k) and (o) of the Customs Act, 1962: ii. penalty should not be imposed on them under the provisions of Section 112 (b) of the Customs Act, 1962 76. S/Shri. Ujval Jose, Joemon and Happy Kurien, partners M/s. Awesome Jewel Concepts. Thrissur were called upon to Show cause as to why: i. penalty should not be imposed on them under the provisions of Section 112(b) of the Customs Act, 1962. A common circumstance of relevance from the above-excerpted portion from the Order-in-Original can be noticed, viz. that the gold seized is in the DTA and the statements recorded are of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,17,53,990/- seized from M/s. Southern Gold P. Ltd Trichur under the provisions of Section 111(o) of the Customs Act. 1962. However, I extend an option to redeem the said gold articles on payment of a redemption fine of Rs. 4,00,000/ (Rupees Four Lakhs only) under Section 125 of the Customs Act, 1962. Appropriate duty, interest and other charges as applicable shall also be payable. The option of redemption shall be exercised within 30 days of receipt of this order. iv. I hold the 10 Kgs of gold sold by Shri Sanjay Subrao Nikome M/s Joyalukkas (I) Pvt. Ltd. and subsequently disposed of by M/s. Joyalukkas (I) Pvt. Ltd. liable for confiscation under Section 111(o) of the Customs Act, 1962. As the gold is not available for confiscation and instead a bond dated 20/01/2015 for an amount of Rs. 2,84,50,000/- and a bank guarantee dated 04/02/2015 for amount Rs. 29,60,000/- had been executed by M/s. Joyalukkas authorising the Department to recover the sale proceeds of Rs.2.85 crores. I order confiscation of the sale proceeds of Rs.2.85 crores under Section 121 of the Customs Act, 1962. However, I allow an option for redemption of the sale proceeds on payment of a redemption fine of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Shri. B. Jayakumar under the provisions of Section 112(b) of the Customs Act, 1962. xiii. I impose a penalty of Rs. 1,00,000/- (Rupees One lakhs only) on Shri. T.R. Saji, under the provisions of Section 112(b) of the Customs Act, 1962 xiv. I impose a penalty of Rs. 50,000/- (Rupees Fifty thousand only) on Shri. Venugopalan under the provisions of Section 112(b) of Customs Act, 1962. xv. I impose a penalty of Rs. 1,00,000/ (Rupees One lakh only) on M/s. Southern Gold Pvt. Ltd. Trichur represented by its Director Shri. C.A. Collins under the provisions of Section 112(b) of Customs Act, 1962. xvi. I impose a penalty of Rs. 1,00,000/- (Rupees One lakh only) on Shri. M.K. Babu, Proprietor of M/s. Smijo Gold, Trichur under the provisions of Section 112 (b) of the Customs Act, 1962 xvii. I refrain from imposing any penalty on M/s. Ajay Co. Trichur, M/s. Leo's Angel Gold, Trichur. Ujval Jose, Joemon, and Happy Kurien. 4.2 Aggrieved by order of confiscation, levy of penalty etc., the importer and the other connected traders filed appeals before the CESTAT. The CESTAT, through the order dated 17.02.2022, allowed the appeals filed by the importers. Hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Angamally. 5.1 The importer, through the reply dated 27.10.2014, explained its stand on the charges against the importer. The Development Commissioner, vide Order-in-Original dated 27.03.2015, directed or held as follows: M/s Ashwin Gold Private Ltd has caused loss of foreign exchange by way of import of Cold Bullion and non-realization of subsequent export proceeds in respect of exports made by them. Therefore I, impose a penalty of Rs. 10,04,00,000/(Rupees Ten crore four lakh only) for their failure to realize the export proceeds in respect of gold ornaments exported from the Cochin SEZ as per provisions under Section 11(2) of the Foreign Trade (Development Regulation) Act, 1992. 2. The company has deliberately violated the terms and conditions of the Letter of Approval and Bond cum legal Undertaking executed by them with the Development Commissioner by illegal removal of imported gold after availing duty exemption which were otherwise required to be utilized for their authorized operations i.e. manufacture and export of gold ornaments, causing violation of the provisions of the SEZ Act, 2005 SEZ Rules, 2006. I therefore, impose a penalty of Rs. Rs. 1.28.00. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is appreciated and applied to on the appreciation of jurisdictional facts and the relevant provision of law. Reproducing his argument, namely, the CESTAT in its appellate jurisdiction examined the provisions of the SEZ Act and the overriding effect of a few provisions of the said law and declared that the Officers of the Customs Department are without jurisdiction in respect of offences noticed by them in DTA, the exclusivity of jurisdiction is a privilege enjoyed by a unit in CSEZ and limited to the notified CSEZ is rendered by appreciating the provision in SEZ Act. A breach occasioning in the functioning of a unit in an SEZ, be whatever it is, the Development Commissioner and the functionaries therein have exclusive jurisdiction and power to initiate action against the erring unit established in an SEZ. But, the commission or omission, the origin of which is in the SEZ, travels beyond the notified SEZ, such commission or omission has two consequences in law: under the SEZ Act, and the authorities empowered in the DTA, such as Customs Act etc. The purpose of any action under SEZ Act is to cancel the permission granted to a unit and collect the penalty for established violation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eized, since is in DTA, the Customs Officers have power and jurisdiction to levy duty; penalty and to order confiscation of smuggled gold into the Country. Paragraph 8.1 of the order under appeal is distinguishable to the case on hand if established by the Department as a serious omission under Act 1962, amounting to smuggling gold into the DTA or Indian territory. The smuggled gold is dealt with as per Act 1962. The Officers of the Customs exercise the jurisdiction as per Act 1962. 7. Mr Augustine supports the order under appeal by reading the order. According to his argument, the order under appeal is a detailed order on all the aspects touching the core controversy in the batch of appeals. Further, it is stated that Section 55 of SEZ Act provides for Rulemaking power and Rule 42 of SEZ Rules 2006 deals with the procedure for sub-contracting in DTA etc. Therefore, per se, the movement of gold from SEZ to DTA is not prohibited but regulated. In the case on hand, the importer was incapacitated from filing a proper reply and explanation before the authorities under Act 1962 or under SEZ Act which resulted in the order of imposition of customs duty, penalty etc., and cancellation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations are possible, the interpretation favourable to a taxpayer must be accepted is entirely out of context. Jurisdiction, in fact, or law, irrespective of the nature of the enactment, has different manifestations. The CESTAT ought to have noticed the subtility of the area of operation in appreciating the competence or jurisdiction of Officers of the Customs Department on the one hand and the Development Commissioner on the other. For the above reasoning, we are convinced and accordingly hold that in the case on hand, for the circumstances noted above, the search and seizure have occasioned in DTA. Therefore, the Officers of the Customs Department, vis- -vis the alleged illegality noted against both the importer and the individuals who handled the gold moved out of SEZ, have jurisdiction under Act 1962. The denial of jurisdiction to the Officers of the Customs Department for offences or violations noticed in DTA would enhance the area of an SEZ and diminish the jurisdiction of the Act 1962. The reversal of Order-in-Original dated 30.05.2016 on the jurisdiction issue by the CESTAT is unsustainable, and illegal, and substantial questions stated, arise for consideration. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices that it is not the case of Revenue that as on the date of said import, AGPL/importer did not have license or authorization to import 4 Kg gold. On 19.08.2014, the letter of approval dated 04.10.2011 for setting up a unit in CSEZ was suspended till the finalisation of the case. On 27.03.2015, the authorisation was cancelled. The 4 Kg of gold imported before 19.08.2014 was still in the custody and jurisdiction at the Air Cargo Complex, Cochin Airport. The gold has been confiscated on the assumption that the 4 Kg of gold is smuggled. The finding of the Tribunal is excerpted at this stage of our consideration. 7. The Commissioner has in fact called the shots at a very early stage and in haste. Said gold was also confiscated on assumptions and presumptions which according to us, is also too premature, which action is discernibly contrary to the basic principles of jurisprudence inasmuch as the same being contrary to principles of natural justice, rule of law and fair trial. It is also the basic tenet of Indian Criminal jurisprudence that there shall not be any presumption of guilt and that an accused shall be presumed innocent until proved guilty. Even in the rarest of rare ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited extent, the said finding does not warrant our interference. W.P.(C) No.27835/2021 11. We have heard Mr P A Augustine and Ms Krishna for the parties. 12. Mr Augustine argues that the importer has been operating its activities in the unit established in CSEZ strictly in compliance with the requirement of law and Rules. To illustrate, he invites our attention to Ext.P4 dated 11.02.2013 of the importer requesting permission to move gold imported into CSEZ to manufacture jewellery and ornaments into DTA. On 14.02.2013 (Ext.P5), permission was granted to move 50 Kg of gold to DTA. He fairly admits that the currency of the permission granted by Ext.P5 is for one year. The importer has applied for permission or extension of the period to the Development Commissioner, and orders have been made by the authorities. The suspension letter dated 19.08.2014 has been directed to be treated as show cause notice by the order dated 27.03.2015 in W.P.(C) No.27189/2014. The importer, no doubt, submitted a reply to the suspension letter dated 19.08.2014, and for want of records, it is averred that a detailed reply could not be submitted. 13. The Development Commissioner, by order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have noted both the contentions Mr Augustine urged. We are of the view that the objection raised by Adv Krishna on the timing of documents now introduced, in the absence of a reply at the first instance, whether the documents now produced could be relied upon etc., to upset the findings of the Development Commissioner are matters to be considered by the appellate authority. The issue has a substantial consequence on both sides. The denial of opportunity cannot be gainsaid, and an order has been made without allowing the importer a fair hearing. Still, as a Writ Court, after perusing the record, we notice that the written submissions, along with documents filed before the appellate authority, are examined in the context of the controversy. A decision on the challenge to the order of the Commissioner is rendered thereafter. As we are satisfied that the matter needs to be remitted to the appellate authority, we are not entertaining the other argument on merits. Hence, the orders of appellate authority dated 07.09.2018 and 19.06.2020 are set aside. The matter is remitted to the appellate authority for consideration and decision afresh. W.P.(C) No.9058/2022 17. The pray ..... X X X X Extracts X X X X X X X X Extracts X X X X
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