Customs jurisdiction in SEZ under SEZ Act, 2005 clarified by Tribunal, ruling in favor of appellant

The Tribunal held that customs authorities lacked jurisdiction in Special Economic Zones (SEZ) under the SEZ Act, 2005. It emphasized that SEZ is outside the Customs Territory of India and activities within SEZ are governed by SEZ laws, not Customs laws. Relying on previous judgments and legal provisions, the Tribunal concluded that customs did not have the authority to issue show cause notices or recover duties within SEZ. As a result, the impugned order was set aside, and the appeal was allowed in favor of the appellant.

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Issues:
Jurisdiction of customs authorities in Special Economic Zones (SEZ) under SEZ Act, 2005.

Analysis:
The appellant imported defective jewellery which was exchanged with well-polished jewellery seized by Customs. The department alleged that duty-free jewellery was removed without payment of custom duty in a clandestine manner. The appellant argued that SEZ is considered a foreign territory, and SEZ laws govern activities within SEZ, not Customs laws. They contended that investigations, search, and recovery of duties should be carried out under SEZ laws, not Customs Act, 1962. The appellant cited case laws to support their arguments.

The Tribunal found that during the relevant period, customs did not have jurisdiction within SEZ territory. Referring to previous judgments, the Tribunal highlighted that SEZ is deemed outside the Customs Territory of India. The Tribunal emphasized that specific authorities under SEZ Act, 2005 have jurisdiction over matters within SEZ. Citing the Apex Court's decision, the Tribunal emphasized the importance of satisfying jurisdictional requirements before issuing show cause notices. Based on the precedents and legal provisions, the Tribunal concluded that customs lacked jurisdiction in SEZ established under SEZ scheme by the Ministry of Commerce. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.

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