TaxTMI Login
AI Drafter - (New and Powerful) ✕
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
Just a moment...
AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether customs duty and interest were leviable on goods supplied to a unit in the Special Economic Zone; (ii) Whether penalties under Sections 114 and 114AA of the Customs Act, 1962 could be sustained.
Issue (i): Whether customs duty and interest were leviable on goods supplied to a unit in the Special Economic Zone.
Analysis: The supply, even if assumed, was to an SEZ unit. In view of the Special Economic Zones Act, 2005 and the SEZ Rules, supplies for authorised operations to an SEZ developer or unit are governed by the special statutory regime and the charging provisions stand overridden to that extent. Where the department does not allege that the goods were outside authorised operations, no legal authority remains to levy or collect customs duty, and interest cannot follow an unsustainable duty demand. The principle that no tax can be levied or collected except by authority of law under Article 265 of the Constitution of India applies.
Conclusion: Customs duty and interest were not leviable, and the demand was without authority of law, in favour of the assessee.
Issue (ii): Whether penalties under Sections 114 and 114AA of the Customs Act, 1962 could be sustained.
Analysis: Penalty under Section 114 of the Customs Act, 1962 was founded on the alleged evasion of duty. Once the duty demand itself could not survive, the foundation for that penalty also disappeared. As regards Section 114AA of the Customs Act, 1962, the show cause notice did not call upon the appellant to answer that specific charge, so the penalty could not be imposed on that basis.
Conclusion: The penalties under Sections 114 and 114AA of the Customs Act, 1962 were unsustainable, in favour of the assessee.
Final Conclusion: The impugned adjudication was set aside insofar as it concerned the appellant, and the appeal succeeded in full.
Ratio Decidendi: Supplies to an SEZ unit for authorised operations are not liable to customs duty where the special SEZ regime overrides the ordinary charging provisions, and consequential penalties cannot survive once the underlying duty demand fails or where the notice does not specifically charge the penalty invoked.
TaxTMI 
