Customs duty was not payable on supplies alleged to have been...

Customs duty was not payable on supplies alleged to have been made to an SEZ unit for authorised operations, because the statutory SEZ scheme overrode the demand and the show cause notice did not allege use outside authorised operations. The Tribunal followed the SEZ-based exemption reasoning in the cited precedent and held the duty demand to be without authority of law; interest also failed because it depended on the same unsustainable demand. Penalty under section 114 was set aside because the alleged evasion vanished once no duty was legally payable. Penalty under section 114AA was also set aside because the notice did not propose that penalty, making its confirmation beyond the show cause notice.