TaxTMI 
TaxTMI 
2010 (7) TMI 712
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....tion against the writ petitioners situated within the Kandla SEZ. 3. The petitioners are permitted to import plastic waste and scrap under the Letter of Approval granted by the competent authority pursuant to the Import Policy made by the Government of India under Public Notice No. 392(PN)/92-97 dated 1-1-1997. The said Policy was announced as per Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as 'the FTDR Act'). The petitioners while importing plastic waste and scrap, many of their consignments were seized. That was the stage when the petitioners, being situated within the Kandla SEZ, Gandhidham, Kutch and imports having made within the said zone, raised the question of jurisdiction of the Customs Officials in seizing their goods and having served with the notices under Section 124 of the Customs Act, 1962, such notices have also been challenged. 4. In most of the cases, it is alleged that the imported goods pertaining to particular bills were examined at Mundra International Container Terminal, MP & SEZ, Mundra in presence of independent panchas. They were examined in the chemical laboratory and they were found to be....
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.... of the Court the changes brought in the Customs Act, 1962 by Finance Act, 2002 with effect from 13-5-2002 by introducing Chapter X-A in the Customs Act dealing exclusively with the SEZs, would contend that the major implication of the aforesaid change was that the SEZ came to be treated as a different territory, outside the purview of the Customs Act. Subsequently, a self contained legislation i.e. Special Economic Zones Act, 2005, having come into force with effect from 10-2-2006, the Special Act will prevail over the matter. He would contend that under Section 52 of the SEZ Act, 2005, Chapter X-A of the Customs Act, 1962, Special Economic Zones Rules, 2003 and Special Economic Zones (Customs Procedure) Regulations, 2003 shall not apply to the SEZs. In furtherance to the same, by notification No. SO 320(E) dated 14-3-2006, the provisions of Chapter X-A have been made inapplicable to the SEZs. Only the offences committed before the commencement of the said Act may continue under the provisions of the Customs Act, 1962 or the Special Economic Zones Rules, 2003 or the Special Economic Zones (Customs Procedure) Regulations, 2003 in view of the protection made under sub-section (2)....
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....ners. 11. The learned counsel for the petitioners would contend that as per the Import Policy, which is statutory, the CIPET, being the designated laboratory, is competent to make examination and submit report. It is not open for the Customs Officials to obtain report from any other laboratory including their In-house Laboratory for taking any action against the petitioners based on such report of the recognized laboratory. It is only on the basis of the report of the so-called In-house Laboratory, the officials of the Customs at Kandla/Mundra have rendered all the units of the Kandla SEZ as unoperational. Several representations between July and December, 2009 to various authorities were forwarded with a request to interfere in the matter and to take steps to enable the industries in the Kandla SEZ to resume their operations, but no action having taken, the writ petitions were preferred. 12. The respondent-Deputy Commissioner of Customs, SEZ, under the authority of Ministry of Commerce & Industry, Department of Commerce, SEZ Division, has filed a detailed affidavit in reply in Special Civil Application No. 12964 of 2009 and detailed the complete procedure of import....
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....nce is being sought, strictly confirmed to the description/definition shown in the aforesaid Clause and that such item is free from any kind of toxic/non-toxic contamination and has not been put to any previous use whatsoever. Before clearance of the plastic scrap/waste, all imported consignments of such plastic scrap/waste are subjected to scrutiny and testing of samples. The customs authorities for the said purpose draw a sample and send the same to the nearest laboratory/office of the Central Institute of Plastic Engineering & Technology with a view to having the same analyzed and verified that such imported consignments are in conformity with the description/definition as given under the said Clause. 14. Mr. P.S. Champaneri, learned Assistant Solicitor General, referring to the Special Economic Zones Act, 2005, would submit that the said Act has been given effect vide notification dated 10-2-2006, but by the said notification Sections 1 to 19, 25 to 30 and 42 to 58 were made operative and other Sections were not made operative. As all the provisions of the Special Economic Zones Act, 2005 were not made operative, in the further clarification dated 3-8-2006 in respect of....
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....nology and National Resource Policy v. Union of India, relating to import of hazardous waste, allowing a time period of 12 months for upgradation of Customs Laboratory at gateway ports as well as posting of manned staff for testing of potentially hazardous wastes and recyclables, it was contended that in compliance of the said direction of the Supreme Court, the Customs House Laboratory, Kandla has been upgraded with advanced analytical equipments for testing of potentially hazardous waste samples installed in the years 2005 and 2006 and necessary fund allocation has also been made as communicated by the Commissioner of Customs, Kandla vide letter dated 21-11-2007. After such installation of equipments and operationalization thereof the Customs House Laboratory, Kandla vide their letter dated 14-4-2008 has informed all the field formation/ports at Kandla/Mundra/Jamnagar/Pipavav/Bhavnagar for testing of such samples of potentially hazardous waste in their laboratory at Kandla. During the investigation it was found that earlier all such samples of plastic waste were being tested by the officers of the Kandla SEZ at CIPET, Ahmedabad, which had formed different adverse reports stating ....
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....nbsp; Whether the customs authorities have jurisdiction to issue any notice or to take any penal under Section 111, Section 113 and Section 114 read with Section 124 of the Customs Act, 1962 against any unit situated within the Special Economic Zone. 2. Whether the report submitted by the Customs House Laboratory, Kandla will prevail over the report submitted by the Central Institute of Plastic Engineering & Technology (CIPET), Ahmedabad and Chennai. 19. The Customs Act, 1962 was brought into force with effect from 1-2-1963 all over India. In the said Act, Chapter X-A was inserted with effect from 1-4-2004 vide Notification No. 43/2003-Cus. (N.T.), dated 22-7-2003, etc. whereby special provisions relating to Special Economic Zones were inserted. Under Section 76A, while the Central Government was empowered to notify and specify Special Economic Zones comprising specifically delineated areas where any goods admitted shall be regarded, in so far as duties of customs are concerned, as being outside the customs territory of India as provided under the said Chapter, under Section 76B, the provisions of the said Chapter X-A and other C....
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....ned in the Chapter XA of the Customs Act, 1962 (52 of 1962) and the Special Economic Zones Rules, 2003 and the Special Economic Zones (Customs Procedure) Regulations, 2003 made thereunder shall not, with effect from such date as the Central Government by notification appoint, apply to the Special Economic Zones. (2) Notwithstanding anything contained in sub-section (1), all offences committed, before the commencement of this Act, under any provisions of the Customs Act, 1862 (52 of 1962) and the Special Economic Zones Rules, 2003 and the Special Economic Zones (Customs Procedure) Regulations, 2003 made thereunder, shall continue to be governed by the said Act or rules, as the case may be. (3) Anything done or any action taken or purported to have been done or taken including any rule, notification, inspection, order or notice made or issued or any permission or authorization or exemption granted or any document or instrument executed under the said provisions of the Act, rules and regulations referred to in sub-section (1) shall, in so far as they are not inconsistent with the provisions of this Act, be deemed to have been done or taken or made or issue or granted u....
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.... Central Government may authorize and (ii) the Development Commissioner may grant a letter of approval to the person concerned to set up a unit and undertake such operation which the Development Commissioner may authorize and every such operation so authorized shall be mentioned in the letter of approval. The customs authority has no such power either to authorize the developer to undertake any operation in the Special Economic Zone nor they have any power to approve any proposal to set up a unit or to undertake any operation within the Special Economic Zone. But that is not the question involved in the present case. We have noticed that the question involved is whether the custom authorities have power to take penal action under Sections 111, 113 and 114 of the Customs Act and thereby power to issue notice under Section 124 of the said Act. Section 20 of the SEZ Act, 2005 relates to agency which may carry out survey or inspection for securing compliance with the provisions of any Central Act by a developer or entrepreneur within the Special Economic Zone. Under Section 21 of the SEZ Act, 2005, the Central Government by notification may specify any act or omission made punish....
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....or approval of the Development Commissioner concerned. Provided further that any officer or agency, if so authorized by the Central Government, may carry out the investigation, inspection and search or seizure in the Special Economic Zone or Unit without prior intimation or approval of the Development Commissioner." 26. As on the date, the seizure was made by the appellant-Union of India through its Customs officials, Sections 20 to 23 of the SEZ Act, 2005 had not been given effect. This was a specific plea taken by the Union of India and not denied by the respondent-writ petitioners. It is only after filing of the writ petitions, the Central Government from its Ministry of Commerce & Industry (Department of Commerce) vide notification No. SO 75(E) dated 13-1-2010 appointed "13-1-2010" as the date on which Sections 20, 21 and 22 of the SEZ Act, 2005 have been given effect, as quoted hereunder :- "SO 75(E). In exercise of the powers conferred by sub-section (3) of Section 1 of the Special Economic Zones Act, 2005, (28 of 2005), the Central Government hereby appoints the 13th January, 2010 as the date on which sections 20, 21 and 22 of the said Act shall come into force....
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....nder other Central Act viz. the "Customs Act, 1962" or "the Hazardous Wastes (Management, Handling & Transboundary Movement) Rules, 2008" have been notified either as "notified offence" nor any officer or agency has been notified as "Enforcement officer" or "Agency" in respect of such other offence or offences committed in a Special Economic Zone. 28. The Hazardous Wastes Rules, 2008 have been framed in exercise of the powers conferred under Sections 6, 8 and 25 of the Environment (Protection) Act, 1986 by superseding the earlier Hazardous Wastes Rules, 1989. "Hazardous waste" has been defined under Rule 3(1) and "waste" has been notified in the Schedule thereto, as evident from the Rule aforesaid and quoted hereunder :- "3. Definitions. - In these rules, unless the context otherwise requires,- 12. 'hazardous waste' means any waste which by reason of any of its physical, chemical, reactive, toxic, flammable, explosive or corrosive characteristics causes danger or is likely to cause danger to health or environment, whether alone or when in contact with other wastes or substances, and shall include- i. &....
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....nsumer wastes) : Perfluoroethylene/propylene Perlluoroalkoxy alkana Metafluoroalkoxy alkane polyvinyl fluoride polyvinylidenefluoride 29. In this case, the parties are concerned with the solid plastic waste as shown in Basel No. B 3010, which has admittedly been imported without prior consent, but the plastic or mixed plastic waste alleged to be mixed with other wastes and are prepared to a specification, as shown in the Basel aforesaid. 30. Chapter XIV of the Customs Act, 1962 deals with "confiscation of goods and convevances and imposition of penalties". Under Section 111 of the Customs Act, confiscation of improperly imported goods, etc. is permissible including any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under the Customs Act or any other law for the time being in force [sub-section (d) of Section 111]. Under Section 112, the authorities are empowered to impose penalty for "improper importation" of goods, etc. Under Section 113, confiscation of goods attempted to....
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....the Special Economic Zone. The competent authorities are also empowered to take penal action under any other Central Act, if such violation is found to have been committed by any or other unit of SEZ including the writ petitioners, with regard to which no notification has been issued either under sub-section (1) or sub-section (2) of Section 21 or sub-section (1) or sub-section (2) of Section 22 of the SEZ Act, 2005. 36. The first question is thereby answered in affirmative in favour of the appellant and against the respondent-writ petitioners. For the same very reason, we hold that the learned Single Judge erred in coming to the conclusion that the customs authority had no jurisdiction to seize the goods for alleged violation of the Central Act. 37. The next question is whether the report submitted by the Customs House Laboratory, Kandla has any overriding effect on the report submitted by the CIPET, Ahmedabad and Chennai. 38. It is not in dispute that the import of plastic scrap is governed by Public Notice No. 392 (PN)/92-97 dated 1-1-1997 issued by the Union of India from its Ministry of Commerce. In the said notice, giving reference to the Handbook of P....
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....the law formulated by the Directorate of Foreign Trade, in force from time to time also apply and action as per Foreign Trade (Development & Regulation) Act, 1992 shall be initiated by the competent authority." 39. In the present case, it appears that after the seizure of the imported consignments of the petitioners, samples under the seal and signature were sent to CIPET, Ahmedabad. According to the writ petitioners, which was not disputed by the appellant-Union of India, the CIPET, Ahmedabad submitted its report in "positive" giving clearance in favour of the writ petitions that their materials are not hazardous wastes. The matters are stated to have sent to the CIPET, Chennai where the matters are either pending or favourable reports have been submitted in favour of the writ petitioners. However, the samples were subsequently forwarded by the Customs department to its in-house laboratory viz. 'Customs House Laboratory, Kandla'. In their local in-house laboratory, after verification of the samples in the form of cut piece of colourless and transparent plastic film while it was reported that the same composed of 'polyethylene', after physical and chemical examination of th....
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....oratory/office of the Central Institute of Plastic Engineering & Technology (CIPET) with a view to having the same analyzed and verified that such imported consignment are in conformity with the description/definition as given in sub-para (i) and (ii) above". The guidelines being specific and unambiguous that "the sample should be sent to the nearest laboratory or office of the CIPET", we hold that the appellant had no business to send the same sample to its own laboratory viz. Customs House Laboratory, Kandla, that too after obtaining the reports from CIPET, Ahmedabad. 43. It will be evident from the original action taken by the officials of the customs department that they properly understood Clause (vii) of the Public Notice No. 392(PN)/92-97, dated 1-1-1997 and, therefore, they drew the sample and sent such sample to the nearest laboratory at CIPET, Ahmedabad. Having received the report in favour of the writ petitioners, as claimed by them, it is not clear as to why they again sent the same sample to CIPET, Chennai. Further, it has not been made clear that why without awaiting for the report of the CIPET, Chennai, they have forwarded another sample to its own laboratory....