2014 (2) TMI 285 - AT - Customs

Tribunal rules in favor of appellants: SEZ area deemed duty-free. Customs Act provisions overridden.

M/s RELIANCE INDUSTRIES LTD Versus COMMISSIONER OF CENTRAL EXCISE

M/s RELIANCE INDUSTRIES LTD Versus COMMISSIONER OF CENTRAL EXCISE - 2014 (311) E.L.T. 401 (Tri. - Ahmd.) Issues Involved:1. Whether duty is payable on the goods removed from SEZ and permitted storage area to the additional area for construction.2. Whether Customs officers have jurisdiction to investigate the case and demand duty.3. Whether the appellants violated the terms of permission granted for storage of steel items by removing them for construction.4. Whether limitation as a ground was raised by the appellants and needs to be considered.5. Whether the demand can be said to be barred by limitation.6. Whether the matter is required to be remanded for re-quantification of duty.Detailed Analysis:1. Duty Payable on Goods Removed from SEZ:The main issue revolved around whether the notification dated 04.06.2007, which included additional land into the SEZ, should relate back to the original notification dated 19.04.2006. The appellants argued that the additional area was always intended to be part of the SEZ and that operations undertaken with the knowledge and approval of SEZ authorities should be considered 'Authorized Operations' under the SEZ Act, 2005. The Tribunal, by majority, accepted the appellants' contention, holding that the notification dated 04.06.2007 should relate back to 19.04.2006, making the operations within the additional area as part of SEZ from the inception. Consequently, no duty was payable under Sections 28 and 28AB of the Customs Act, 1962.2. Jurisdiction of Customs Officers:The Tribunal held that the SEZ Act, 2005 and the SEZ Rules, 2006 form a self-contained code for the functioning of SEZs. The Customs Act, 1962 provisions were made inapplicable to SEZs by Notification No.S.O.320(E), dated 14.03.2006. The Tribunal concluded that the Customs officers did not have jurisdiction to investigate and demand duty under the Customs Act, 1962 for operations that were under the purview of SEZ authorities and were conducted with their approval. The issue was deemed irrelevant as the SEZ Act, 2005 provisions prevailed.3. Violation of Terms of Permission:The Tribunal found that the operations undertaken by the appellants were with the knowledge and approval of the SEZ authorities and thus constituted 'Authorized Operations.' The permissions granted under Rule 50(1)(e) of the SEZ Rules, 2006 were not violated as the additional area was deemed part of the SEZ from the original notification date. Therefore, the appellants did not violate the terms of the permission granted for storage of steel items.4. Limitation as a Ground:The Tribunal noted that the issue of limitation was raised by the appellants in their reply to the show cause notice and was also discussed in the Order-in-Original. Therefore, the issue of limitation needed to be considered.5. Demand Barred by Limitation:The Tribunal held that the demand was time-barred under Section 28 of the Customs Act, 1962, as the extended period could not be invoked without an intention to evade duty. The operations were conducted with the approval of SEZ authorities, and there was no evidence of clandestine removal or intent to evade duty.6. Remand for Re-quantification:Given the conclusion that no duty was demandable under the Customs Act, 1962, the Tribunal found no need to remand the matter for re-quantification of duty. The appeals filed by the assessee and individuals were allowed, and the appeals filed by the Revenue were rejected.Conclusion:The Tribunal, by majority, set aside the impugned orders, allowed the appeals filed by the assessee and individuals, and rejected the appeals filed by the Revenue. The operations in the additional area were deemed part of the SEZ from 19.04.2006, and no duty was payable under the Customs Act, 1962.