TaxTMI 
TaxTMI 
2022 (5) TMI 592
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Approvals (BOA), New Delhi, for conducting authorized operations of manufacture of Bio Diesel and Glycerine. The Commerce Ministry issued another LOA dated 30.07.2009, allowing trading in Bio Diesel, as an authorized operation, by the 1st petitioner. (b) It is seen from the Statement of Objects and Reasons of the Special Economic Zones Act, 2005 [for short, "the Act"], the Government of India has announced the Special Economic Zone scheme in April, 2000 with a view to provide internationally competitive environment for exports. The objectives of Special Economic Zones includes making available goods and services, free of taxes and duties supported by integrated infrastructure for export production, expeditious and single window approval mechanism and a package of incentives to attract foreign and domestic investments for promoting export lead growth. The SEZ units are put under the administrative control of the Development Commissioners under the Ministry of Commerce to grant necessary permissions, to provide other facilities and also to undertake investigation and impose penalties for violation of any of the provisions of the Act. (c) Before introduction of SEZ ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....able acids, vegetable oils, fatty acids and also fatty acid methyl ester (FAME) which are imported from Malaysia, Indonesia and the U.S.A. as well as domestically procured material. (f) The petitioner imported 42,137.424 MTs of FAME and imported consignments and blended it with 6,022.762 MTs of Bio Diesel manufactured by it to export the blended Bio Diesel as per the specifications of its clients. Since the petitioner does not have sufficient storage capacity to store huge quantity of bio diesel imported, in some cases, blending was done in the tanks located in the Customs Private Bonded warehouse. Further, in the year 2011, the petitioner filed shipping bill with VSEZ for export consignment of 27,000 MT of Bio Diesel. The same was manufactured by the petitioner using 26,044.06 MT of FAME imported from M/s.Natural Bio Energy LLC, USA vide Bill of Entry dated 21.02.2011. (g) After filing the Shipping bill on 10.03.2011, for export of Bio Diesel cleared by the authorized officer of SEZ to the storage tanks of EIPL, the officers of the 2nd respondent visited the bonded warehouse of EIPL on 11.03.2011 and drawn samples of the said export material on the ground that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that he has filed wrong declarations in Form-A for issue of GSP Country of Origin (Preferential) obtained from Development Commissioner of VSEZ and Export Inspection Agency (EIA) that the product under export is a product of Indian Origin. It is averred that the mis-declarations of the values, Country of origin, slight change in the descriptions of the same product and routes etc., by the petitioner are clear indications of the modus operandi adopted and there is enough material available which confirm that no manufacturing activity took place and VSEZ has been utilized for fraudulent purpose. As the SEZ unit was being mis-utilised to pursue the fraudulent intentions, causing irreparable damage to the reputation of Indian Nation and harming other domestic industry in the name of providing jobs to a few people in their factory in order to carry out their design, thereby defeating the very purpose for which the SEZ Scheme has been brought into force, the action under Customs Act, 1962 has been initiated by the DRI in the interest of the Nation. 5. The respondent no.3 filed counter, contending that he has no role to play nor concerned with the matter and the Adjudication Order was....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nate remedy is provided by law. 27.5. When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion. 27.6. In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with." 10. From the judgment of the Hon'ble Supreme Court, it is very much clear that a Writ Petition can be entertained by this Court though an alternate remedy is available when the authority issuing the Show Cause Notice has no jurisdiction to issue the same. Hence, we have no hesitation in coming to the conclusion that in the given set of circumstances, Writ Petition can be entertained. 11. The 1st petitioner is a unit situated in Visakhapatnam SEZ. Vide proceedings....
X X X X Extracts X X X X
X X X X Extracts X X X X
....p; Dated 30th July, 2009 To M/s.Cleancities Biodiesel India Ltd., Phase-II, Special Economic Zone (VSEZ), Duvvada, Visakhapatnam - 500 049. Sub:LOP No.9/VSEZ/187/VSEZ/2006/ dated 17.05.2006 issued for manufacture of Biodiesel and its Bi-product Clycerin - Amendment of LOP - Inclusion of Trading Activity in the LOP - Regarding. * * * Sirs, I am directed to refer to your letter dated 29.07.2009 on the subject mentioned above and to convey the approval of the Development Commissioner, Visakhapatnam Special Economic Zone for amendment of LOP including Trading of Biodiesel and Blended Biodiesel. All other terms and conditions stipulated in the Letter of permission No.9/VSEZ/187/VSEZ/2006/ dated 17.05.2006 shall remain unchanged. Please keep this letter attached to the Original Letter of Permission and acknowledge the receipt. Yours faithfully, (T.G.K. Jagannadham) Asst. Development Commissioner. Copy to the Asst. Commissioner of Customs, VSEZ, Visakhapatnam. 13. From the abov....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... across the Bar that if the alleged violations is in SEZ, the respondent authorities have no jurisdiction to issue the Show Cause Notice, as the amendment authorizing the Customs Officer to deal with violation in SEZ area came into effect in the year 2016. 18. In order to find out as to whether the DRI Officers have jurisdiction to seize the goods imported by a unit situated in SEZ, it would be just and proper for us to refer to certain undisputed facts, which are as under:- (i) The Writ Petitioner has licences to trade (import & export) and also to import, treat the product and then export. This aspect is not in dispute. (ii) The fact that the product is not stored in SEZ area, is also not in dispute. (iii) The fact that the product imported is not in dispute. (iv) It was stored in a Bonded Warehouse of M/s.East India Petroleum Ltd. (EIPL), Visakhapatnam near the port for export. (v) The fact that enough space is not available in SEZ area to store the imported product is not in dispute. (vi) The fact that it was imported for trade as contended has to be accepted for the reason that the product was not treated at the time of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Section 22 of the SEZ Act. 22. Further, section 52 of the Act also spells out that the Customs Act is not applicable in respect of units situated in SEZ unit. It would be appropriate to extract Section 52 of the Act, which is as under:- "52. Certain provisions not to apply.-(1) The provisions contained 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, 1962 (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 permissio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed offence or offences committed or likely to be committed in a Special Economic Zone. The enforcement officer(s), for the reasons to be recorded in writing, may carry out the investigation, inspection, search or seizure in the Special Economic Zone or Unit and shall intimate the details of any action initiated under sub-section (3) of section 21 of the Act to the Joint Secretary in charge of Special Economic Zones Division in the Department of Commerce immediately and in any case not later than seven days of initiation of any action. But, the same cannot be invoked in the instant case as the alleged violation was prior to 2016. 25. An objection came to be raised by Sri N. Harinath, learned Assistant Solicitor General that the issue raised by the learned Senior Counsel for the petitioners with regard to jurisdiction is pending adjudication before the Hon'ble Apex Court in M/s.Mangali Impex vs. Union of India. But after going through the judgment of the Delhi High Court, against which an appeal is preferred before the Hon'ble Apex Court, we feel that the issue therein relates to validity of Section 28(11) of the Customs Act, 1962. Infact, the judgments rendered by CESTAT (thou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ial Economic Zone in one consignment, the Specified Officer may allow the export of such cargo on execution of a Bond for the duty involved subject to the condition that the Unit shall submit the proof of export within ninety days of removal of such cargo under Bond, failing which applicable duty on the goods not exported shall be payable in terms of the Bond". 30. A reading of the above makes it clear that the passage of goods from SEZ to a Port has to necessarily take place for the purpose of export, more so, when there is no enough space for storage of these goods in SEZ area, which is also an admitted fact. Merely, because, the goods were taken out from SEZ area to be transported to Port or to a storage unit before they are exported cannot be brought within the purview of Customs authority. 31. As seen from the record, in the show cause notice, it is alleged that insofar as consignment exports in the years 2009-10, there was no movement of goods from SEZ to outside SEZ. Learned Senior Counsel for the petitioner placed material on record to show that in respect of such consignments, Development Commissioner of Visakhapatnam, SEZ initiated proceedings under the SEZ and impo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s a bonded warehouse. Therefore, removal of the goods from SEZ area or storage of goods in bonded warehouse for the purpose of export, imported under a licence issued for the said purpose as and when vessel is available or otherwise, in our view, cannot be brought within the purview of DRI officials under the Customs Act and it is only officials under SEZ Act, who would be bestowed with jurisdiction to initiate the proceedings. 34. At this stage, Sri N. Harinath, learned Assistant Solicitor General and Sri Suresh Kumar Routhu, learned Standing Counsel took us to the answers given to question Nos.28 and 29 by the petitioner when he was examined by DRI officials to show that the petitioner has violated the provisions of the Customs Act and the terms of the licence. But, the answers to questions 34 and 35 would clearly indicate that the documents were filed before the concerned at the time of export and the goods were moved from SEZ and the shipping bills were filed before the concerned in respect of the goods which were to be exported/ moved out of SEZ area, for loading. It would be appropriate to refer to the same. Q.34) What are the documents submitted to Customs/SEZ au....