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2023 (1) TMI 909
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....ESTAT), South Zonal Bench, Bangalore; and Orders dated 27.03.2015, 07.09.2018 and 19.06.2020 made by the competent authorities under The Special Economic Zones Act, 2005 (for short, SEZ Act) and the prayer for a direction to the Revenue to implement the order of the CESTAT dated 17.02.2022 in Final Order No.2005720065/2022 insofar as the findings related to 4 Kgs of gold seized from the Airport. We refer to the parties as 'Revenue' for the orders made under the Customs Act, 1962 (for short, Act 1962); 'competent authority/SEZ' for the orders made under SEZ Act and M/s. Ashwin Gold Pvt Ltd/AGPL as 'importer'. 3. The circumstances preceding to initiation of the steps under Act 1962 or under SEZ Act are similar, therefore, are stated hereunder: 3.1 AGPL/importer has established an export unit vide order dated 04.10.2011 read with 26.02.2012 in Special Economic Zone Cochin (CSEZ). The unit is established to make gold ornaments and jewellery for export from CSEZ. On 11.02.2013, the importer applied to the Specified Officer of Customs, Cochin Special Economic Zone, Kakkanad, Cochin, for taking out gold imported for job work in a Domestic Tariff Area (for short, DTA). On 14.03.2013,....
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....h Section 120 of the Customs Act, 1962. ii. 11095.90 gms. of gold ornaments seized from M/s Kallarackal Jewellers, Angamaly, being made of 10 Kgs. of gold bars of 995 purity, smuggled out from M/s. Ashwin Gold (P) Ltd: should not be confiscated under the provisions of Section 11 (b), (j), (k) and (o) of the Customs Act, 1962. iii. 6499.030 gms. of gold articles seized from M/s Smijo Gold. Trichur on 12-08-2014 being made of 6.5 Kg of gold smuggled out from M/s. Ashwin Gold (P) Ltd.. CSEZ on 08-08-2014, should not be confiscated under the provisions of Section 111(b), (j), (k) and (o) of the Customs Act, 1962. iv. 4346.890 gms. of gold articles seized from M/s. Southern Gold Pvt Ltd., Trichur on 12-08-2014 and made out of 4 Kgs of gold smuggled out from M/s. Ashwin Gold (P) Ltd.. CSEZ on 08.08.2014 should not be confiscated under the provisions of Section 111(b), (j), (k) and (o) of the Customs Act, 1962. v. the 4581.581 gms. of gold articles seized from M/s Ajay & Co Trichur should not be confiscated under the provisions of Section 111(b), (j), ( k) and (o) of the Customs Act, 1962. vi. the 1075.317 gms. of gold articles seized from M/s.....
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.... 112(b) of the Customs Act, 1962. 71. Shri. K. Venugopalan, accountant. M/s. Kallarackal Jewellers, Angamaly was called upon to Show cause as to why:- Penalty should not be imposed on him under the provisions of Section of the Customs Act, 1962. 72. M/s. Southern Gold Pvt. Ltd.. Trichur represented by its Director Shri C.A. Collins, were called upon to show cause as to why:- (i) the 4346.89 grams of gold seized from M/s. Southern Gold Pvt. Ltd., Trichur should not be confiscated under the provisions of Section 111(b), (j), ( k) and (o) of the Customs Act, 1962; and (ii) penalty should not be imposed on them under the provisions of Section 112 (b) of the Customs Act, 1962. 73. Shri. M.K. Babu, Prop. M/s. Smijo Gold. Trichur was called upon to Show cause as to why- i. the 6499.03 grams of gold seized from M/s. Smijo Gold. Trichur should not be confiscated under the provisions of Section 111(b), (j), (k) and (o) of the Customs Act. 1962 and ii. penalty should not be imposed on them under the provisions of Section 112 (b) of the Customs Act, 1962. 74. M/s. Ajay & Co.. Trichur was called upon to Show cause ....
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....01.958 gms. of gold taken on provisional release and extend an option to redeem the balance quantity on payment of a redemption fine of Rs.5,00,000/- under Section 125 of the Customs Act, 1962. M/s. Kallarakkal Jewellery shall also be liable to pay appropriate duty and other charges including interest. Option for provisional release in respect of the balance quantity shall be exercised within 30 days of receipt of this order. In the event of failure to comply with the terms as above, the Bank Guarantee executed shall stand adjusted there against. ii. I order confiscation of the 6499.030 gms. of gold articles valued at Rs. 1,75,73,377/- seized from M/s. Smijo Gold, Trichur under the provisions of Section 111(o) of the Customs Act, 1962. However I extend an option to redeem the said gold articles on payment of a redemption fine of Rs. 6,50,000/- (Rupees Six lakhs Fifty thousand only) under Section 125 of the Customs Act, 1962. Appropriate duty, interest and other charges as applicable shall also be payable. The option of redemption shall be exercised within 30 days of receipt of this order. iii. I order confiscation of the 4346.89 gms. of gold articles valued at Rs.....
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....y on Shri. Sanjay Subrao Nikam under the provisions of Section 114A of the Customs Act, 1962. This penalty shall relate only to the 11186.325 grams of gold improperly removed from SEZ to DTA but not recovered during investigation. viii. I impose a penalty of Rs. 1,00,00,000/- (Rupees One Crore only) on Shri Sanjay Subrao Nikam. Managing Director, M/s. Ashwin Gold Pvt. Ltd.. under the provisions of Section 112(a) The Customs Act, 1962. This penalty shall relate to the gold improperly removed from SEZ to DTA but since recovered and to the 1Kg gold under seizure at Air Cargo Complex, Nedumbassery which is confiscated vide (vi) above. ix. I impose a penalty of Rs. 10,00,000/- (Rupees Ten lakhs only) on Shri. K.O. Anto, Prop. Kallarakkal Jewellery, Angamaly under the provisions of Section 112(b) of the Customs Act, 1962. x. I impose a penalty of Rs. 1,00,000/- (Rupees One lakh only) on M/s. Joyalukkas under the provisions of Section 112(b) of the Customs Act, 1962. xi. I impose a penalty of Rs. 1,00,000/- (Rupees One lakh only), on Shri. Jeeson Davis under the provisions of Section 112(b) of the Customs Act, 1962. xii. I impose a penalty of R....
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....ext facet of the narration arises under SEZ Act. On 19.08.2014, the Development Commissioner of SEZ issued a show cause notice to the Managing Director of AGPL/Importer on the following statement of charges: "Whereas the Commissioner of Customs, Cochin, vide letter No. 5-14/5/14-R81 Cus dated 11-8-2014 informed this office that M/s Ashwin Gold Private Limited is suspected to have been removing gold imported by them duty free and is taking out the items without Completing the required formalities and without payment of appropriate amount of Custom duty and accordingly requested permission to visit the premises and conduct necessary verification in the presence of Officers and Shri Sanjay Subrao Nikam, Managing Director of the Company. On completion of the verification at the CSEZ premises of M/s Ashwin Gold Pvt. Ltd. at Plot No. 16-A(SDF), Ground Floor, CSEZ, The Commissioner of Customs (Preventive) vide letter dated 128-2014 informed that their verification has revealed that 10.5 KG of gold imported: them was nu, available in the premises. Further investigation led to recovery of the said gold from the premises of two jewellery old workers at Thrissur. A further r....
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....try, Directorate General of Foreign Trade, Government of India, New Delhi and the appellate authority, by order dated 07.09.2018, dismissed the appeal. The importer filed a Review Petition before the appellate authority, and the review was rejected by an order dated 19.06.2020. The cancellation orders and imposition of penalty on the import under the SEZ Act are questioned in W.P.(C) No.27835/2021. 5.3 AGPL/importer filed W.P.(C) No.9058/2022 for a mandamus seeking implementation of the order dated 17.02.2022 of CESTAT directing the release of 4 Kg of gold. 6. Mr Sreelal Warrier, persuasively, but with considerable force, challenges the reasoning and conclusion recorded by the CESTAT in the order dated 17.02.2022 as illegal and unavailable in the case circumstances. By referring to the places of search, seizure, or recovery of gold, as stated in paragraph 4, it is argued that the CESTAT committed a serious error in law in expanding the jurisdiction of CSEZ beyond the notified area and thus has debilitated the power and function and duty of the Officers under Act 1962. There is no quarrel on the scope of SEZ Act and the privileges enjoyed by a unit located in CSEZ. The jurisdi....
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....e, he would confine the argument only to the jurisdictional aspects. 6.1 Our attention has not been invited to the Scheme or the provisions in Act 1962, and to Sections 21 and 22 of the SEZ Act, which deals with a Single Enforcement Officer or agency for notified offences; investigation, inspection, search or seizure by an Officer specified under Sections 20 and 21. The sheet-anchor of his argument is that, in categorical words, Section 21(2) states that the Central Government, by general or special order, authorizes any officer or agency to be the enforcement officer or agency in respect of any notified offence or offences committed in a Special Economic Zone. The argument is that Section 21 refers to and deals explicitly with a notified offence or an offence committed in an SEZ. In the case on hand, the offence is under the Customs Act and not detected in the SEZ or limited to the bounds of SEZ. Explained, he argues that the inspection by the Officers of the Customs Department of the unit of the importer in SEZ on 11.08.2014 is to verify whether the removal of gold from CSEZ into DTA is preceded by permission or not. On the day of the inspection and search, it was clear that t....
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....h the importer and imported goods in DTA without following the procedure or moving the goods illegally. Though a few submissions are made on the reasons for such alleged stealth movement of gold from CSEZ to DTA, neither are we referring to them nor getting prejudiced by such argument on the case pleaded by the importers. The simple fact that begs the question is whether the Customs Officers are without jurisdiction for seizure or recovery of material in a search carried out in a DTA. Section 21 of SEZ Act deals with the notified offence or offence occasioning in an SEZ. The circumstances stated in the show cause notice are accepted as true and correct; it cannot be said that the subject violations happened in SEZ and were terminated in SEZ. Therefore, only the authorities under the SEZ Act have jurisdiction to act against the importer. In a situation as the present, this Court is of the view that for alleged unauthorized movement of goods/gold, the Development Commissioner etc., would have jurisdiction on the establishment and continuance of a unit in an SEZ and for importing goods/gold into DTA without paying customs duty, the Customs Department have jurisdiction on the informati....
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....e out to DTA clandestinely as he was doing earlier. Moreover, the license of the unit of M/s Ashwin Gold within SEZ was suspended and hence the said unit has ceased functioning within CSEZ. Neither, in his statements recorded under Section 108 of Customs Act, 1962 nor in his reply to SCN, has Shri. Sanjay submitted any details/ documents to prove either bonafide nature of the transactions or as to show how he intended to use it, especially when licence of his unit within SEZ was suspended and he himself had removed all essential machinery from there. In this circumstance, the import of 4 Kg of gold by M/s. Ashwin Gold can not be considered as a bonafide import for use by unit within CSEZ but acquires the character of a transaction where gold was attempted to be imported for removing it clandestinely to DTA without payment of Customs duty thus making it liable for confiscation under Section 111 (d) and (o) of Customs Act, 1962." 9.1 The CESTAT, in paragraphs 6 and 7 of the order under appeal, had considered whether the 4 Kg gold bar imported by AGPL/importer lying in an uncleared area at Air Cargo Complex Nedumbaserry could be subjected to confiscation or payment of duty and pena....
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....t of gold by the importer, with status as a unit in CSEZ, is disabled. Therefore, there is nothing wrong with confiscating the 4 kg of gold. Mr Augustine contends that in anticipation of committing an offence, preventive orders are made under a few special enactments, and in the case on hand, the power, and the jurisdiction of the functionaries under the Act are attracted with the occasioning of one circumstance or the other set out in Act 1962. 10. There are two aspects for independent and objective consideration: search and seizure in DTA and, conversely, an investigation into commissions or omissions in an SEZ. The circumstance is that 4 Kg of gold was imported by the AGPL/importer when it had authorization and permission. The imported gold was lying in an uncleared area at the Air Cargo Complex at Nedumbassery, Cochin Airport. Stock, goods or gold lying in an uncleared area cannot be confiscated on the ground that upon completion of import, the said goods could also be used for a purpose otherwise provided for by law. Succinctly put, the Order-in-Original, in anticipation of the 4 Kg of gold being misused or moved out of CSEZ, has been confiscated. We consider that the reaso....
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....erspective of obligations arising under SEZ Act and the cancellation or collection of fine or penalty from the importer is independent of other actions available against the importer by other authorities. She canvasses that the Development Commissioner considered every aspect raised by the importer. The order dated 25.03.2015 was made on the material available with the Development Commissioner. The importer did not file material along with the reply or during the personal hearing provided in this behalf. The material now relied on by the importer is ex post facto and, for the first time, brought before this Court or before the appellate authority. 15. The ground that the appellate authority did not afford a fair and complete opportunity to the importer is no reason to find fault with the detailed conclusions arrived at by the Development Commissioner. Since the prayer in the instant writ petition can be treated as one of certiorari, it is commended for our consideration after looking at the record to determine whether the order of appellate authority is justifiable from the record. If not, the record suggests that the matter needs to be re-examined by the appellate authority; th....