TaxTMI 
TaxTMI 
2009 (11) TMI 141
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.... clearing the goods to SEZ Units. 4. In Special Civil Application Nos. 9656, 9713, 10444, 10445, 10446, 13298, 11032 and 11909 of 2008, Mr. K.S. Nanavati and Mr. Mihir H. Joshi, learned Senior Advocates appeared with Mr. Keyur Gandhi for Nanavati Associates for the petitioners. 5. In Special Civil Application Nos. 9792 & 9806 of 2008, learned advocates Mr. Vikram Nankani with Mr. Uday Joshi with Mr. Hardik Gupta of M/s. Trivedi and Gupta Advocates and Mr. Hardik Modh appeared for the petitioners. 6. In Special Civil Application No.11057 of 2008, Mr. B.D. Karia, learned advocate appeared for the petitioners. In Special Civil Application No.12176 of 2008, learned advocate Mr. Hasit Dave appeared for the petitioners. 7. For the sake of brevity and convenience, facts are taken from Special Civil Application No.9656 of 2008. 8. The petitioners in Special Civil Application Nos.9656 & 9713 of 2008, being DTA units have prayed for writ of Mandamus restraining the respondents from levying and demanding export duty for supplies of Iron Ore Pellets made by the Vizag Pellet Unit of the petitioner to the SEZ unit of the Company located at Essar Special Economic Zone, Hazira, Sura....
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....assessed and the subject goods were permitted for acceptance by the SEZ unit without any demand for export duty. The petitioners addressed a letter dated 12-3-2007 to the Director in the SEZ Section of Ministry of Commerce requesting for clarification/confirmation for the effect that no export duty will be leviable on sale of iron ore/iron ore pellets to SEZ Units in view of Rule 27 of the SEZ Rules, 2006. The Superintendent of Central Excise, Range-I, Surat-I Commissionerate had also sought clarification from the petitioners vide his letter dated 24-10-2007 regarding levy of export duty on iron ore pellets. The petitioners' Hazira Unit had, vide its letter dated 25-10-2007 clarified the matter by pointing out that no export duty was leviable on supplies of pellets to the SEZ Unit, particularly in view of Rule 21 of the SEZ Rules, 2006, it was also clarified that the provisions of section 12 of the Customs Act, 1962 were inapplicable for the purpose of levying export duty for the aforesaid movement of goods, as such movement could not be considered as that of 'goods exported from India' for the purpose of section 12. The petitioners submitted that at the relevant time, ....
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....elopment, export duty was imposed on specified iron and steel items with effect from 10-5-2008 and the effective rates of export duty on various items were prescribed through Notification No. 66/2008-Cus., dated 10-5-2008. Representations were made regarding the applicability of the said Notification with regard to levy of export duty on certain steel products supplied from DTA to SEZ. Pursuant to the representations, a Circular was issued on 14-5-2008 by the respondent No.3 stating that the matter was under active consideration of the respondent No. 2 and till such time a clarification was received all such DTA supplies would be chargeable to export duty. By Office Order dated 17-5-2008, the said Circular dated 14-5-2008 was amended and it was ordered that the subject goods would be provisionally assessed on furnishing a suitable PD bond with surety/security and the goods would be allowed to be admitted in the SEZ until further orders. The respondent No.2 had also directed the Development Commissioners of SEZ throughout the country, vide its Circular letter dated 23-5-2008 to allow supply of steel products on submission of bond and bank guarantee. Notifications were issued by the ....
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....e respondent No.3 and letter dated 9-7-2008 were suspended and arrangement regarding supply of goods to the SEZ unit as contained in the letter dated 1-2-2008 was ordered to be continued. This ad interim relief was continued with certain modifications. Even in Special Civil Application Nos. 10444 of 2008, 10445 of 2008 and 10446 of 2008, the Court has passed separate order on 14-8-2008 and granted ad interim relief despite the fact that it was urged on behalf of the revenue that there are certain distinguishing features in all these three petitions. The Excise Department has challenged the said order before the Apex Court. Even the earlier order dated 25-7-2008 passed by this Court was challenged before the Apex Court and the Apex Court vide its order dated 9-4-2009 dismissed the Special Leave Petition by observing that the said SLP is against an interim order and hence, there is no reason to interfere. However, this Court was requested by the Apex Court to take up the matter for final hearing as the matter is of an important nature. The Apex Court further observed that the views expressed by the High Court in the impugned order are to be treated as tentative views. It is in the ab....
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....harging section is that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section. No one can be taxed by implication. A charging section has to be construed strictly. If a person has not been brought within the ambit of the charging section by clear words, he cannot be taxed at all. In CIT v. Venkateswara Hatcheries (P.) Ltd. [1999] 3 SCC 632, it is held that neither the word 'produce' nor the word 'article' has been defined in the Act, Therefore, it may be permissible to refer to a dictionary. But where the dictionary gives divergent or more than one meaning of a word it would not be safe to construe the said word according to the suggested dictionary meaning. In such a situation, the word has to be construed in the context of the provisions of the Act having regard to the legislative history of the provisions of the Act and the scheme of the Act. It is a settled principle of interpretation that the meaning of the words occurring in the provisions of the Act must take their colour from the context in which they are so used. 15. The provisions of section 53 of the SEZ Act, 200....
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....39;without payment of duty, taxes or cess'. 16. It is further contended that the definition of the term 'Export' in the SEZ Act, being an artificial definition for certain purposes as contemplated under the said Act, it should be restricted to the said Act for the contemplated purposes and cannot be extended or applied for any other purpose. The definition contained in one Act cannot be adopted for the purposes of another Act more particularly when the other Act contains a definition of the term for the purposes of that Act. The duties of customs which have a definite connotation in the economy, legislation and the Constitution, cannot be levied by an artificial extension of the term 'Export' since the same would offend the Constitution. It is, therefore, contended that export duty is not levied under the provisions of the SEZ Act and, therefore, cannot be justified by any provision there under. The purported decisions of the respondent Nos. 1 and 2 regarding liability of export duty in case of supplies by a Domestic Tariff unit to a SEZ unit are contrary to law and deserve to be quashed. The said decisions suffer from the vice of non-application of mind sinc....
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....ion the Court is to ascertain for what purpose the fiction is created, and after ascertaining this, the Court is to assume all those facts and consequences which are incidental or inevitable corollaries to the giving effect to the fiction. But in so construing the fiction it is not to be extended beyond the purpose for which it is created, or beyond the language of the section by which it is created. It cannot also be extended by importing another fiction. However, beneficial may be the scope and ambit of the legal fiction created by the Legislature while enacting section 4A such fiction can arise only when the express language of the section laying down the conditions precedent for raising of such a fiction is complied with by the mortgagee-in-possession concerned seeking the benefit of such a deeming fiction. Such a fiction cannot be extended by the Court on analogy or by addition or deleting words not contemplated by the Legislature. In State of W. B. v. Sadan K. Bormal SCC 59, itis held that Legislature may sometimes create a chain of fictions by the same Act or by succeeding Acts. If the Legislature is competent to enact a provision creating a legal fiction, there is ....
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....ers from enactment to enactment. Therefore, when excise law seeks to tax the value, the concept therein cannot be bodily lifted and incorporated in section 3 of the U.P. Trade Tax Act, 1948, which essentially deals with ascertainment of the price structure depending upon the negotiations between the parties. In Rajindra Dyeing & Printing Mills v. Union of India 1993(67) ELT 217 (Guj.), this Court held that the term 'exported' appearing in Rule 2(a) of the Rules will have to be held that when the export goods go out of control of the person exporting them and they cease to be available for consumption within the country, they can be said to have been exported. Therefore, though the term 'India' is defined by the Act as including 'territorial waters of India' in the context of the drawback Rules, the term 'India' will have to be interpreted to mean landmass of India only. In Union of India v. Rajindra Dyeing & Printing Mills Ltd. [2004] 10 SCC 187 it is held that when there is movement of the goods outside the territorial waters of India, it is then that an export may be said to have taken place. In the instant case, the cargo was destroyed wh....
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....ons. There was no separate law relating to air customs, and the administration of air customs was governed by certain rules made under the Indian Aircrafts Act, 1911. Therefore, while revising the provisions of the Sea Customs Act, at the time of enactment of the Customs Act, 1962, it was proposed to consolidate the provisions relating to sea customs, land customs and air customs into one comprehensive measure. With that statement of objects and reasons in mind, the Parliament enacted the Customs Act, 1962 being an act to consolidate and amend the law relating to customs. 20. Mr. Champaneri has further submitted that under section 2(15), the term 'duty' is defined to mean a duty of customs leviable under the said Act. The term 'export' is defined under section 2(18) to mean with its grammatical variations and cognate expression, taking out of India to a place outside india. The term 'export goods' is defined under section 2(19) to mean any goods which are to be taken out of India to a place outside India and the term 'exporter' is defined under section 2(20) to mean in relation to any goods at any time between their entry for export and the time w....
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....ty and section 18 provides for provisional assessment of duty. 21. Mr. Champaneri has further submitted that Chapter X-A incorporating special provisions relating to Special Economic Zone were enacted by Act 20 of 2002 effective from 11-5-2002 and have been omitted vide section 99 of the Finance Act, 2007 with effect from 11-5-2007. Section 76B as was operative during the above mentioned periods, provided that the provisions of the said Chapter and other Chapters shall apply to goods admitted to a Special Economic Zone but in the event of conflict between the provisions of this Chapter and other Chapters, the provisions of this Chapter shall prevail, Section 76E provided for exemption from duties of customs and section 76F provided for levy of customs. The Special Economic Zone had been one of the latest measures adopted by the Government of India to promote exports from India. It was in March, 2000 that the then Union Commerce and Industry Minister took a visit to China to get first hand information about the functioning of Special Economic Zones. This led to the announcement of SEZs in India through the annual Export-import Policy of March, 2000. It took the Government almost ....
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....ssumes significance in the Act of 2005 is defined under section 2(m) to mean taking goods or providing services, out of India, from a Special Economic Zone, by land, sea or air or by any other mode, whether physical or otherwise, or supplying goods, or providing services, from the Domestic Tariff Area to a unit or a developer or supplying goods, or providing services, from one unit to another unit or developer, in the same or different Special Economic Zone. The term 'import' is defined under section 2(o) to mean bringing goods or receiving services, in a Special Economic Zone, by a Unit or Developer from a place outside India by land, sea or air or by any other mode, whether physical or otherwise, or receiving goods, or services by a Unit or Developer from another Unit or Developer of the same Special Economic Zone or a different Special Economic Zone. The term 'manufacture' is defined under section 2(r). The term 'Special Economic Zone' is defined under section 2(za) to mean each Special Economic Zone notified under the proviso to sub-section (4) of section 4 and sub-section (1) of section 4 (including Free Trade and Warehousing Zone) and includes an exist....
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...., 1962 are not exempt when any goods or services exported out or imported into or procured from the Domestic Tariff Area. In view of the provisions contained in section 7 read with the First Schedule and conscious non-inclusion of the Central Excise Act, 1944 and the Customs Act, 1962 in the First Schedule make the intention of the Parliament clear not to exempt taxes, duties and cess leviable under the Central Excise Act, 1944 and the Customs Act 1962. 25. Mr. Champaneri has further submitted that section 26 of the Act of 2005 also assumes importance. Section 26(1) provides that every developer and the entrepreneur shall be entitled to the exemptions, drawbacks and concessions contained therein. Exemption from any duty on customs under the Customs Act, 1962 or the Customs Tariff Act, 1975 or any other liability for the time being in force, is available on goods imported into or services provided in a Special Economic Zone or an Unit to carry on the authorized operations by the developer or entrepreneur. Similarly, exemption from any duty of customs under the Customs Act, 1962 or the Customs Tariff Act, 1975 or any other law for the time being in force on goods exported from or ....
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....ial Economic Zone shall, with effect from such date as the Central Government may notify, be deemed to be a port, airport, inland container depot, land station and land customs stations, as the case may be, under section 7 of the Customs Act, 1962. 28. Mr. Champaneri has further submitted that in exercise of powers conferred under section 55 of the Act of 2005, the Central Government had made the Special Economic Zones Rules, 2006 as originally enacted on 10-2-2006 and amended on 10-8-2006. The Rules cannot go beyond the legislative enactment nor the Rules can provide for anything which is inconsistent with what is manifest in the statutory provisions. Rule 27 makes provisions for import and procurement. Rule 27(1) provides that the unit or developer may import or procure from the Domestic Tariff Area without payment of duty, taxes or cess or procure from Domestic Tariff Area after availing export entitlements or procure from other units in the same or other Special Economic Zone or from Export Oriented Unit or Software Technology Park Unit or Bio-technology Park unit, all types of goods, including capital goods (new or second-hand), raw materials, semi-finished goods (including....
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....in Domestic Tariff Area which does not come within the ambit of definition of developer or entrepreneur. He has, therefore, submitted that the writ petitions filed by the Units in the Domestic Tariff Area challenging the applicability of export duty on the Domestic Tariff Area supplies made by a Unit in the Domestic Tariff Area to units in the Special Economic Zone cannot be entertained by this Court. 30. Mr. Champaneri has further submitted that having regard to section 2(m)(ii) of the Act of 2005 defining 'export' to, inter alia, mean supplying goods or providing services, from the Domestic Tariff Area to a unit or developer, export duty is applicable particularly when section 51 of the Act stipulated that the provisions of the Act shall have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than the said Act. Furthermore, having regard to section 53 of the Act of 2005, providing that a Special Economic Zone shall be deemed to be a territory outside the customs territory of India, in view of the deeming provisions, for the authorized operations ....
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....laiming rebate as regards the duty of excise levied while the DTA units are supplying goods to SEZ units and are them selves exports for the purpose of Rules 18 and 19 of the Central Excise Rules, 2002. He has, therefore, submitted that supplies from DTA to SEZ are eligible for various export benefits such as drawback, DEPB or towards fulfilment of advance license obligations, etc. If these supplies from a place in India to another place in India are not treated as export, such benefits would not be admissible. He has, therefore, submitted that the combined reading of all these provisions leads to a conclusion that supplies made by a DTA unit to units/developers in SEZ are to be treated as exports and they do not enjoy any exemption from export duty. 32. Mr. Champaneri has further submitted that the exemption available under section 26(2) cannot be claimed to be an exemption from levy and payment of export duty by a DTA unit. The basic objective of levying export duty is to discourage export of steel items and augment domestic availability. The export of any item from the SEZ to a place outside India is statutorily exempt from export duty under section 26(1)(b) of the Act of 200....
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....se of levy of duty, have been defined under the said Act itself, section 2(18) defines export to mean taking out of India to a place outside India; section 2(19) defines export goods as goods which are to be taken out of India to a place outside India; Section 2(27) defines India as including the territorial waters of India. Therefore, the taxable event contemplated under the Customs Act, 1962 for the purpose of levy of Export Duty is taking the goods out of the territorial waters of India to a place outside India, in which case the goods would be dutiable goods as contemplated under section 12 of the said Act and attract levy of export duty, to be paid at the time of exportation of such goods. Export under the Customs Act, 1962, therefore, can be said to have taken place only upon movement of the goods outside the territorial waters of India. Reference is made to the decision of the Apex Court in the case of Rajindra Dyeing & Printing Mills Ltd. (supra). 35.3 In the absence of any amendment of the definitions of the terms 'Export' and 'India' in the Customs Act, 1962, or any amendment in the charging section, i.e., section 12 or insertion of a charging provision....
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....r analogy or by trying the probe into the intention of the Legislature and by considering what was the substance of the matter. Reference is made to the decision of the Apex Court in the case of E. V. Fernandez (supra). 36.3 The contention that levy of Export Duty is impliedly contemplated under the SEZ Act, principally on account of the fact that unlike other levies, the levy of Export Duty has not been specifically exempted under the provisions of the said Act, is wholly misconceived. In the first place, as stated above, there cannot be a levy of tax by implication. Secondly, the necessity for exemption would arise if the subject is liable to tax in the first place. In any case an overall view of the provisions of the SEZ Act and the Rules would establish that levy of Export Duty on the movement of goods from the Domestic Tariff Area to the Special Economic Zone is not at all provided for or contemplated thereunder, which will be evident from the following facts. 36.4 The Statement of Objects and Reasons of the SEZ Act, 2005 indicates that the policy for setting up of Special Economic Zones had been adopted by the Government of India with a view to provide an internationall....
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....ption from various taxes specified therein, which would otherwise have to be paid by persons other than the Special Economic Zone Unit/Developer. 36.8 Rule 23 of the SEZ Rules, 2006 provides that supplies from the Domestic Tariff Area to the Special Economic Zone would be eligible for export benefits as admissible under the Foreign Trade Policy. This would include Duty Entitlement Pass Book Scheme and other benefits/concessions under the Policy. The procedure for claiming drawback and DEPB benefits is provided in Rule 24 and Rule 30. 36.9 Rule 27 permits an Unit or Developer to import or procure from the Domestic Tariff Area all types of goods, without payment of duty or procure from the Domestic Tariff Area such goods after availing export entitlements. This means that the export entitlements available on account of the export of goods from the Domestic Tariff Area to the Special Economic Zone are available either to the Domestic Tariff Area supplier or the Special Economic Zone Unit/Developer at their option. Therefore, duty drawback or DEPB and/ or other export benefits would be available to either party at their option. The sweeping exemption granted under this provision ....
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....s Act, 1962 by incorporating the definition of the term 'Export' under the SEZ Act, 2005 into the Customs Act, 1962? 37.1 The term 'export' having been defined in the Customs Act, 1962, for the purposes of that Act, there is no question of adopting or applying the meaning of the said term under another enactment for any purpose of levying duty under the Customs Act, 1962. In other words, a definition given under an Act cannot be displaced by a definition of the same term given in another enactment, more so, when the provisions of the first Act are being invoked. Even in the absence of a definition of the term in the subject statute, a definition contained in another statute cannot be adopted since a word may mean different things depending on the setting and context. Reference is invited to the decisions of the Apex Court in the case of Ellis Bridge Gymkhana (supra), Venkateswara Hatcheries (P.) Ltd.'s case (supra) and Qazi Noorul H.H.H. Petrol Pump's case (supra). In fact, the interpretation canvassed by the department is not merely the adoption of a definition of another statute, but the incorporation of a taxable event itself, which is impermissible un....