SEZ jurisdiction prevails over customs enforcement for pre-2016 export movement and bonded warehouse goods

The Special Economic Zones Act, 2005 was treated as overriding the Customs Act, 1962 for authorised SEZ operations, so pre-2016 customs enforcement could not extend to goods imported into an SEZ, stored in a bonded warehouse, and moved for export under the SEZ framework. Because the alleged conduct occurred before the 05.08.2016 notification, customs officers lacked jurisdiction to investigate, seize, or issue a show cause notice under the Customs Act. The challenge was therefore maintainable on jurisdictional grounds, and the show cause notice and consequential proceedings were held unsustainable.

---

---

Issues: Whether the Directorate of Revenue Intelligence had jurisdiction to issue the show cause notice and initiate proceedings against a unit situated in a Special Economic Zone in respect of goods imported, stored in a bonded warehouse, and moved for export before the 2016 notification.

Analysis: The writ petition was entertainable despite the availability of an appellate remedy because the challenge went to the jurisdiction of the issuing authority. The Special Economic Zones Act, 2005 was held to have overriding effect over the Customs Act, 1962 by virtue of its non obstante clause. The statutory scheme treating a Special Economic Zone as a territory outside the customs territory of India for authorized operations, together with the provisions excluding the application of Chapter XA of the Customs Act and the procedure permitting movement of goods to a bonded warehouse for export, led to the conclusion that pre-2016 customs officers did not have authority to investigate, seize, or proceed against such SEZ-related activity under the Customs Act. The later notification of 05.08.2016 was held inapplicable to the dispute because the alleged violations predated it.

Conclusion: The show cause notice and the consequential adjudication were without jurisdiction and liable to be quashed.

Final Conclusion: Proceedings initiated by the customs authorities against the SEZ unit could not be sustained for the period in question, as the matter fell within the SEZ regulatory framework and not the customs enforcement power then in force.

Ratio Decidendi: Where the Special Economic Zones Act operates with overriding effect and the alleged conduct pertains to authorized SEZ-related movement or storage of goods before the relevant empowering notification, customs authorities cannot assume jurisdiction under the Customs Act to issue a show cause notice or seize the goods.

---