Customs officers lacked authority to seize goods under SEZ Act violations, Section 110 seizure legally unsustainable

CESTAT Allahabad held that customs officers lacked proper authority to seize goods under SEZ Act violations. The tribunal found that Section 110 of Customs Act was not a notified offence under SEZ Act per Notification S.O. 2665(E) dated 05.08.2016, making the seizure legally unsustainable. Commissioner (Appeals) failed to establish how appellant violated Customs Act provisions. Vehicle confiscation under Section 115(2) was unwarranted as owners had no knowledge of unauthorized goods transportation. Confiscation of goods, seizure of vehicles, and penalty were set aside. Appeals allowed.

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Issues Involved:
1. Jurisdiction and authority of NSEZ officers under the SEZ Act and Customs Act.
2. Legality of seizure and confiscation of goods under Section 110 and Section 111(m) of the Customs Act.
3. Imposition of penalties under Sections 112(a), 112(b), and 114AA of the Customs Act.
4. Confiscation of vehicles under Section 115(2) of the Customs Act.

Issue-wise Detailed Analysis:

1. Jurisdiction and Authority of NSEZ Officers:
The Appellant argued that the officers of Customs mentioned under Rules 2(1)(c) and 2(1)(zd) of the SEZ Rules are appointed under the SEZ Act to discharge functions as specified in the SEZ Rules and do not automatically possess the powers and functions of a Proper Officer under the Customs Act. The reliance was placed on SEZ Instruction No.09/2011, which clarified that officers in SEZs are recruited from customs formations but do not have the powers of Proper Officers under the Customs Act unless explicitly delegated.

2. Legality of Seizure and Confiscation:
The Appellant challenged the seizure of goods under Section 110 of the Customs Act, arguing that it is not a notified offence under the SEZ Act as per Notification No. S.O. 2665(E) dated 05.08.2016. The adjudicating authority failed to establish how the Appellant contravened Section 111(m) of the Customs Act. The Tribunal noted that the Preventive Officer, NSEZ, had no power to detain the subject goods under Section 110 of the Customs Act since it is not a notified offence under the SEZ Act.

3. Imposition of Penalties:
The Appellant contended that the penalties imposed under Sections 112(a), 112(b), and 114AA of the Customs Act were unwarranted as the alleged violations were not notified offences under the SEZ Act. The Tribunal found that the adjudicating authority did not establish a clear contravention of the relevant sections of the Customs Act.

4. Confiscation of Vehicles:
The Tribunal found that the confiscation of vehicles under Section 115(2) of the Customs Act was unwarranted. The subject vehicles were used for transporting goods without the knowledge of the owner or person-in-charge, which is a requirement under Section 115(2). Thus, the appeal regarding the confiscation of vehicles was allowed.

Conclusion:
The Tribunal concluded that the NSEZ officers lacked the authority to detain and seize the goods under Section 110 of the Customs Act as it is not a notified offence under the SEZ Act. Consequently, the confiscation of goods under Section 111(m) and the penalties imposed under Sections 112(a), 112(b), and 114AA were legally unsustainable. The confiscation of vehicles under Section 115(2) was also deemed unwarranted. Therefore, the appeals were allowed, and the impugned orders were set aside, granting consequential relief to the Appellant.

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