TaxTMI 
TaxTMI 
2025 (1) TMI 1679
X X X X Extracts X X X X
X X X X Extracts X X X X
....8.2018, Officers of Noida Special Economic Zone [NSEZ] Customs visited factory premise of Appellant No.1 which is a partnership concern and Appellant No.2 is a partner in Appellant No.1. During the visit, three workers namely Shri Nandan Bera, Shri Sujit Kumar Bera and Shri Subhash Chandra Pal were present in the factory and 5 machines used for making jewellery were found. The Officers found that the factory was operational. On being demanded, Sujit Kumar Bera produced all the gold available in the factory. Total quantity of gold was found to be 2417 grams. All three workers found present in the factory were unable to produce any documentary evidence in respect of stock of gold and consequently, gold was detained under Section 110 of the Customs Act, 1962 [The Act]. Statement of Shri Sujit Kumar Bera and Shri Nandan Bera was recorded on 29.08.2018 under Section 108 of the Act, wherein they stated that they were manufacturing jewellery on the instruction of the owners. 3. Summon dated 31-08-2018 was issued to Appellant No.2 and in reply to the above summon, Appellant No.2 vide letter dated 31/08/2018 informed the investigating officers that the detained gold alloy was received fr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....No.1 illegally imported the subject goods into NSEZ which is deemed to be port within the meaning of Section 7 of the Act as per Rule 11(11) of SEZ Rules, 2006 r/w Section 53(2) of SEZ Act, 2005 and as per Rule 2(o) of SEZ Rules, 2006 receiving goods or services by unit or developer from another unit or developer of the same SEZ falls under the definition of import. b) As per statement of Appellant No.2, it appears that the Voucher No.069/2018 dated 28.08.2018 was only prepared after the detention of goods by the Customs Officers during their visit to the premise of Appellant No.1 in order to cover up the illegally possessed gold and unauthorized operation contravening Rule 41(f) of the SEZ Rules, 2006. c) Since Appellant No.1 did not possess valid LOA, they had no authority to undertake any operations within NSEZ and exemption available thereunder, making the subject goods liable for confiscation u/s 111(o) of the Customs Act, 1962. d) Since Appellant No.1 had illegal possession of gold without any proper documents, the subject goods were liable to be confiscated u/s 111(o) of the Customs Act, 1962. e) The Appellant No.1 violated Rule 36 of SEZ ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the cross examination both, Appellants No.2 and 4 stated that the Seized gold alloy was received by Appellant No.1 for manufacturing of jewellery on job work basis against Voucher No.69/2018 dated 28/08/2018. 10. After cross examination, the Appellants No.1, 2 and 4 submitted their final written submissions before Adjudicating Authority submitting that the seized gold alloy was legally imported by Appellant No.3 and same was sent to the factory of Appellant No.1 against voucher No.69/2018 dated 28/08/2018 for manufacturing jewellery on job work basis. 11. The NSEZ officers on the instructions of the Adjudicating Authority, issued notice to Appellant No.3 directing Appellant No.3 to submit copies of stock register as on 29.08.2018 and record of movement of goods as per proviso of Rule 35 of the SEZ Rules, 2006. Appellant No.3 in compliance of the same submitted following documents:- i) Copy of Stock Register as on 29/08/2018 ii) Copy of Job work register maintained as per proviso of Rule 35 of the SEZ Rules, 2006 for the movement of goods in the SEZ iii) Copy of import register iv) Copy of export register v) Copies of Voucher issu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sh Tripathi, Advocate appeared for Appellants No.3 and 4 and Shri J.M. Sharma, Authorised Representative appeared for the Appellants No.1 and 2 whereas, Respondents were represented through learned Departmental Representative for the Revenue. 15. Heard both the sides and perused the appeal records. Appellants have also filed their Written Submissions. 15.1 We find that the allegation against Appellant No.1 is that the seized goods were found at the factory of Appellant No.1 without any valid documentation and it did not have valid Letter of Approval [LOA]. Allegation against Appellant No.2 is that he played key role in illegal activity of possession of gold and allegations against Appellant No.4 is that he connived with Appellant No.1 in fabricating vouchers to cover-up the illegal activities. The Appellants have contended that the above allegations ought to be investigated and adjudicated by the Development Commissioner of SEZ and same is beyond the jurisdiction of the Customs Officers whereas, the learned DR relied upon Circular No.11/2017-Cus dated 31/03/2017 and Notification No.C.1/1/2009-SEZ dated 05/08/2016 to establish that the Customs Officers have jurisdiction to inv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....risdiction in the matters pertaining to Refund, Demand, adjudication and Review. On the face of it can be said that the instant matter does not pertain to Refund, Demand and Review. Only question arises whether the adjudication mentioned in the above circular also covers adjudication of the issues raised in the present case. 15.6 Perusal of the above circular makes it clear that Circular No.11/2017 dated 31/03/2017 was issued by CBEC in order to clarify amendments made in SEZ Rules, 2006 by way of inserting a new Rule 47 (5) vide Notification No. GSR 772 (E) dated 05/08/2016 which stated that the functional operations like Refund, Demand, Adjudication, Review and Appeals are to be made by the Jurisdictional Customs and Central Excise authorities in accordance with the relevant provisions contained in the Customs Act, Central Excise Act & Finance Act. 15.7 Rule 47 is placed under Chapter-V of the SEZ Rules, 2006. Chapter-V of SEZ Rules, 2006 lays down conditions subject to which goods may be removed from a SEZ to the Domestic Tariff Area [DTA]. Rule 47 deals with sales in the DTA. As per Section 53 of the SEZ Act, 2005 SEZ is deemed to be an area outside the Customs Territory ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hority but in the present matter issues are non-validity of the LOA and possession of goods without any proper documentation by Appellant No.1. It is not the case of the Department that the goods were bought into SEZ illegally or attempts were made to remove the goods from SEZ to DTA. The Adjudicating Authority fails to record any finding as to how Section 111 (o) of the Act can be invoked in the instant case particularly, when Appellant No.3 has placed on record documents establishing gold were brought into SEZ legally and gold alloy was sent to Appellant No.1 for job work. The matter pertaining to invalid LOA falls squarely under the domain of Development Commissioner. And the issue of subcontracting goods on job work from one unit to another in the same SEZ cannot be equated with bringing the goods from outside India into Indian Territory. In view, of the same it can be said that Section 111(o) of the Act was wrongly invoked. Consequentially, reliance placed by the Adjudicating Authority on Notification No.C.1/1/2009 SEZ dated 05/08/2018 in order to establish jurisdiction of Customs Officers to investigate and seize goods in the instant matter was not as per the law. 17.1 Now....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 04/09/2018 that the voucher No.69/2018 was produced on the advice of one Shri B.P. Sharma who was father of Appellant No.4, but the investigating officers failed to record the statement of Shri B.P. Sharma. 17.3 The authenticity of the Voucher No.69/2018 cannot be disputed merely because out of 17 vouchers issued during the relevant time, Appellant No.3 issued only one voucher to the Appellant No.1 and rest to the others. Voucher No.69/2018 is part of 17 vouchers which were issued by the Appellant No.3 during the relevant time. All the vouchers were serially numbered and were also recorded in the job work register. In view of the same, the authenticity of the voucher No.69/2018 cannot be questioned. The Adjudicating Authority failed to discuss the stock registers and vouchers submitted by the Appellant No.3 on the instruction of Department itself. 18. Rule 41 of SEZ Rules, 2006 deals with sub-contracting. Sub clause (1) permits sub-contracting a part of its production process to a unit in SEZ with the prior permission of the Special Officer. Whereas, clause (f) of Rule 41 allows the sub-contracting without permission of Special Officer in any financial year, when the consol....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 112 (a), (b) and 114 AA of the Act is not tenable and is liable to be set aside and we do so. 20. In view of the above discussions, the Order-In-Original No.04/Commr./Noida-Cus/2018-19 dated 09/07/2019 passed by the learned Commissioner of Customs, Noida is set aside. All the four appeals filed by the Appellants are allowed with consequential relief, as per law. (Order pronounced in open court on........................) Sd/- (P. K. CHOUDHARY) MEMBER (JUDICIAL) -Separate Order (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) PER SANJIV SRIVASTAVA MEMBER (TECHNICAL): 21.1 I have gone through the order prepared by the Learned Brother - Member (Judicial) but after long persuasion I do not find myself in agreement with the same. 21.2 The basic reason why the impugned order is proposed to be set aside, as evident from the order of Learned Brother, as evident from para 19.1 of the order is that Commissioner was not having the jurisdiction in the matter, the case being related to an SEZ Unit. 22.1 Facts as recorded in the impugned order are reproduced below: "2.1 On the basis of intelligence, the team of NSEZ Customs Officers visited the fact....
X X X X Extracts X X X X
X X X X Extracts X X X X
....were being done on the direction of the owner of the Company namely Shri Sanjeev Kumar Jain and such instructions were conveyed to them telephonically; (iii) the gold as raw material was received by them through a messenger sent by Shri Sanjeev Kumar Jain and after preparation of gold jewellery, the same was handed over to the messenger sent by said Shri Jain (iv) No documents were prepared by them for receiving and disposal of goods 2.5 Summons dated 30.08.2018 were issued to Shri Sanjeev Kumar Jain. In response to the said summons Shri Vipul Jain instead of Shri Sanjeev Kumar Jain appeared before the investigating officer. The statement of Shri. Vipul Jain was recorded on 30.08.2018. In his statement dated 30.08.2018, Shri Vipul Jain inter alia stated that: (i) Shri Sanjeey Kumar Jain did not hold any position in the company and that Shri Sujit Kumar Bera and Shri Nandan Bera had mistakenly uttered the name of Shri Sanjeev Kumar Jain as owner of the company (ii) Shri Rajnish Kumar Jain, his father was looking after all the work of the company but that day he was out of the town 2.6 On being summoned on 31.08.2018., Shri Rajnis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ated 28.08.2018 to the said effect. However, on being asked about the said letter dated 31.08.2018, he in his statement dated 31.08.2018 deposed that on receiving the Summons and information about the recovery of 2471 grams yellow metal (22 Carat Gold) he became desperate and could not understand what to do, then Shri B.P. Sharma, (CA) father of Shri Chakshu Sharma, Partner of M/s Jayashree Jewellers, NSEZ Noida advised him to submit such letter; that Shri B.P. Sharma (CA) only prepared and handed over the voucher No. 2018/069 dated 28.08.2018 to him on 31.08.2018 and advised him to submit the same along with letter which he signed on 31.08.2018 and submitted to the department in response to the summons and also sent the same through speed post on 31.08.2018.Thus, it is alleged that the party attempted to. cover up the unauthorized possession and activity being conducted in the factory by fabricating documents in connivance with Ms Jayashree Jewellers. Further in his statement, Shri Rajnish Kumar Jain accepted that his Unit's LOA was not valid / renewed and therefore, the factory was working illegally, and he regretted-for the same 2.8 From the facts and statements men....
X X X X Extracts X X X X
X X X X Extracts X X X X
....overed from the factory- premises of M's Encee International, Plot No 158; NSEZ, Noida 2.10 During the course of investigation, the facts revealed that 2471 grams gold recovered from the factory premises M/s Encee International, Plot No. 158, NSEZ Noida was not accompanied by any document viz voucher / challan as stated by the employees namely Shri Nandan Bera, Shri Sujit Kumar Bera working in the factory In their statement referred supra and also evidenced from the statement dated 31.08.2018 of Shri Rajnish Kumar Jain recorded under Section 108 of Customs Act,1962. 2.11. It is alleged that during investigation of the case, following facts emerge - ● M/s Encee International does not have a valid Letter of Approval presently, and accordingly, they are not authorized to undertake any operations within the NSEZ viz. procurement of raw material. manufacture, job work or any such activity, ● During the visit of the said unit no records pertaining to receipt, stocking, processing and disposal of the yellow metal in M/s Encee International were found; ● All the workers, involved in the manufacturing of the Jewellery in M/s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tside India by land, sea or air or by any other. mode, whether physical or otherwise; or (i) receiving goods, or services by, Unit or Developer from another Unit or Developer of the same Special Economic Zone or a different Special Economic Zone, Thus, the party illegally imported the subject goods into NSEZ. (b) As per statement of Shri Rajnish Kumar Jain, it appears that the voucher No.2018/069 dated 28.08.2018 was only prepared after the detention of goods by the Customs officer during their visit to the premises of the party in order to cover up .the illegally possessed gold and authorized operation contravention of Rule 41(f) of The Special Economic Zones Rules, 2006 (c) As per Section 111(0) of the Customs Act 1962, "any goods exempted subject to any condition, from duty or any prohibition in respect of the import thereof under this Act_or any other law for the time being in force, in respect of which the condition `is not observed unless the non- observance of the condition was-sanctioned by the proper officer," are liable for confiscation Since the party did not possess a valid LOA, they did not had the authority to undertake any operations within NSEZ and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s rendered himself liable to penal action in terms of Section 112(a) and 114AA of the Customs Act, 1962. 3. CASE FOR THE DEPARTMENT 3.1 Now, therefore, M/s Encee International, Plot No. NSEZ, Noida are hereby required to show cause, as to why:- a. Goods namely Yellow Metal (Gold) detained at their factory premises on. 29.08.2018 under panchnama dated 29.08.2018 and later seized vide 'Seizure Memo dated 06.09.2018,valued at Rs. Rs.62,00,326/- should not be confiscated under the provisions of Section111(o) of the Customs Act,1962; and b. Penalty should not be imposed upon them under the provisions of Section 112(a)& (b) and 114AA of the Customs Act, 1962 3.2 Shri Chakshu Sharma, Partner of M/s Jayashree Jewellers NSEZ Noida is required to show cause as to why penalty should not be imposed on him in terms of Section 112(a) and 114AA of the Customs Act, 1962; 3.3 Shri Rajnish Kumar Sharma, Partner in M/s Encee International, NSEZ Noida to the Commissioner, Noida Customs Commissionerate, Dadri, Concor Complex, Gautam Budh Nagar, as to why penalty should not be imposed on him in terms of Section 112(a) and 114AA of the Customs Act....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... August, 2016 S.O. 2666(E).-In exercise of the powers conferred by subsection (2) of section 21 and second proviso to section 22 of the Special Economic Zones Act, 2005 (28 of 2005) (hereinafter referred as the Act), the Central Government hereby authorises the Additional Director General, Directorate of Revenue Intelligence for offences under the Customs Act, 1962 (52 of 1962) and the Additional Director General, Directorate General of Central Excise Intelligence for offences under the Central Excise Act, 1944 (1 of 1944) and the Finance Act, 1994 (32 of 1994) to be the enforcement officer(s) in respect of any notified 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. Notification SO 2667 (....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., the Central Excise Act, 1944, and the Finance Act, 1994 and the rules made there under or the notifications issued there under.". 3. In the principal rules, after rule 78, the following rule shall be inserted, namely: - "79. Audit in Special Economic Zones for indirect taxes- All the authorised operations under Special Economic Zones Act, 2005 and transactions relating thereto in Special Economic Zones and Units in the Special Economic Zones shall be audited by the Customs officers from a panel drawn by the Jurisdictional Development Commissioner in consultation with the Jurisdictional Chief Commissioner of Customs and Central Excise.". 23.2 From the plain reading of the above provisions and Notification it is evident that provisions of Section 111 and Section 124 of the Customs Act, 1962 have been notified are Section 21(1) of the and the Jurisdictional Commissioner have been notified as the specified officer under Section 21 (2), ibid for investigating the cases under the said Section. Also in terms of Rule 47 of SEZ Rules, 2006, the jurisdictional Custom Officers have been notified for adjudication of the cases. 23.3 In case of Hon'ble Andhra Pradesh Hi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d on Officers empowered under 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 no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-section (2) provides that SEZ shall with effect from the date of notification by the Central Government be deemed to be a port, airport, inland container port, land station and land customs station under Section 7 of the Customs Act. 21. The SEZ Act, 2005 has taken into consideration and has provided for amendment of the various taxing statutes, or modified them, for fulfilling the object and purpose of the Act. Section 7 provides for exemption from tax, duties or cess on any goods or services exported out of or imported into or produce from DTA by unit in SEZ or a developer subject to terms and conditions as may be prescribed and be exempt from the payment of tax, duties or cess under all enactment specified in the First Schedule. Section 27 of the SEZ Act, 2005 applies Income Tax Act with certain modifications in relation to developers and interpreneurs carried out authorised operations in SEZ and modifications are specified in Second Schedule. Section 57 amends the enactment specified in the Third Schedule, which are amended by SEZ Act, 2005. The Central Sales Tax is not included in any of these Schedules. 22. We also do not find any substance in the contentio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....LICATION NO. 5978, 5979 & 5980 of 2023] Hon'ble High Court of Gujarat has held as follows: "17. Now, for this purpose, we may refer to Section 22 of the SEZ Act which deals with investigation, inspection or search or seizure, same reads as under:- "22. Investigation, inspection and search or seizure: The agency or officer, specified under section 20 or section 21, may, with prior intimation to the Development Commissioner concerned, carry out the investigation or search or seizure in the Special Economic Zone or in a Unit if such agency or officer has reasons to believe (reasons to be recorded in writing) that a notified offence has been committed or is likely to be committed in the Special Economic Zone: Provided that no investigation, search or seizure shall be carried out in a Special Economic Zone by any agency or officer other than those referred to in sub-section (2) or sub- section of section 21 without prior approval of the Development Commissioner concerned. Provided further that any officer of agency, if so authorised by the Central Government, may carry out the investigation, inspection, search or seizure in the Special Economic Zone o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct, he is also issuing an order under CGST Act as authorized by Act or under intimation to jurisdictional officer of Central Government and as such it appears that respondents are empowered to carry out search proceedings in SEZ. Therefore, it cannot said that they were acting without the authority of law or jurisdiction. Further, by virtue of circular dated 5.7.2017, functions of proper officers under CGST Act are also defined. Hence, once Central Government has notified the functions of proper officers, said functions shall also be applicable to be carried out by the officers under CGST Act and hence it cannot be said that there was any lack of authority on the part of respondents, as contended. 21. At this stage, out of few decisions which are tried to be relied upon by learned Government Pleader, we may observe from one of the decisions in the case of Essar Steel Limited (supra) issued by the Coordinate Bench of this Court, wherein provisions of SEZ Act are analyzed to some extent, of-course in background of said facts, but to our conclusion, few observations contained in paragraphs 41.3.2, 41.3.3 and 41.3.4 are of assistance and as such, we quote the same hereunder:- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from the Domestic Tariff Area to the Special Economic Zone. Therefore, there is no conflict in applying the respective definitions of export in the two enactments for the purposes of both the Acts and therefore, the non-obstante clause cannot be applied or invoked at all. 41.3.4 Similarly, reliance on Section 53 of the SEZ Act 2005 to contend that a Special Economic Zone is a territory outside India, is misconceived. Section 53 provides that the Zone would be deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorized operations. The term ‗customs territory' cannot be equated to the territory of India and in fact, such term has been defined in the General Agreement of Tariffs & Trade, to which India is a signatory, to mean an area subject to common tariff and regulations of commerce and that there could be more than one customs territory in a country. Moreover such an interpretation would lead to a situation where a Special Economic Zone would not be subject to any laws whatsoever. The entire SEZ Act 2005 would be rendered redundant since it is stated to extend the whole of India. In any case, various provisions of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....14. Courts across the legal system - this Court not being an exception - are choked with litigation. Frivolous and groundless filings constitute a serious menace to the administration of justice. They consume time and clog the infrastructure. Productive resources which should be deployed in the handling of genuine causes are dissipated in attending to cases filed only to benefit from delay, by prolonging dead issues and pursuing worthless causes. No litigant can have a vested interest in delay. Unfortunately, as the present case exemplifies, the process of dispensing justice is misused by the unscrupulous to the detriment of the legitimate. The present case is an illustration of how a simple issue has occupied the time of the courts and of how successive applications have been filed to prolong the inevitable. The person in whose favour the balance of justice lies has in the process been left in the lurch by repeated attempts to revive a stale issue. This tendency can be curbed only if courts across the system adopt an institutional approach which penalizes such behavior. Liberal access to justice does not mean access to chaos and indiscipline. A strong message must be conveyed that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng back on 17.08.2017. It is further worth noting that the gold, is one of the specified commodity under section 123 of Customs Act, 1962. In case of D Bhoormull [1983 (13) ELT 1546 (SC)] Hon'ble Supreme Court has observed as follows: "On receiving information that some packages containing smuggled goods had been left by a person in the premises of M/s Shah Rupaji Rikhabdas at 98, Narayana Mudali Lane, Madras-I and that these packages were about to be despatched to Bangalore for disposal, a posse of Preventive Officers of the Customs House went to the said shop on June 4, 1962. They found ten packages in that shop. Baboothmull of M/s Shah Rupaji Rikhabdas was present there. The officers questions Baboothmull about those packages. Baboothmull replied that he was not the owner of those packages and that somebody next to his shop had left them outside the premises and since that person had not returned for a considerable time, he got them removed into the shop. Baboothmull was unable to throw any light with regard to the owner or the contents of the packages. 3. The Officers seized these goods under a mahazarnama. 4. On June 9, 1962, a letter was addressed b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lf. (3) Every notification issued under sub-section (2) shall be laid before both Houses of Parliament as soon as may be after it is issued." 26. Large scale smuggling of gold or other goods into India may pose a threat to the economic and fiscal interests and policies of the State. Such illicit trade is often carried on by organized international smugglers in the secrecy of the underworld. The more it is organized, the less are the chances of its detection, and greater the difficulty of proving the offences relating thereto. Laws have therefore been enacted in most countries, which mark a partial or wholesale departure in matters relating to smuggling, from the general principle of penal law, viz., that it is for the State or its Department to prove the offence against the accused or the defendant. Thus in England, Section 290(2) of the Customs and Excise Act, 1952 provides that where in any proceeding relating to Customs or Excise any question arises as to the place from which any goods have been brought or as to whether or not any duty has been paid or any goods have been lawfully imported etc., then the burden of proof shall lie upon the other party to the pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt man may, on its basis, believe in the existence of the fact in issue. Thus legal proof is not necessarily perfect proof often it is nothing more than a prudent man's estimate as to the probabilities of the case. 31. The other cardinal principle having an important bearing on the incidence of burden of proof is that sufficiency and weight of the evidence is to be considered to use the words of Lord Mansfield in Blatch v. Archar (1774) 1 Cowp. 63 at p. 65 "According to the Proof which it was in the power of one side to prove and in the power of the other to have contradicted". Since it is exceedingly difficult, if not absolutely impossible for the prosecution to prove facts which are especially within the knowledge of the opponent or the accused, it is not obliged to prove them as part of its primary burden. 32. Smuggling is clandestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 10....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rcumstantial evidence, we are supported by the decision, of this Court in Issardas Daulat Ram's case, (1962) Supp. (1) SCR 358. There, on September 14, 1954, that is, long before insertion of Section 178A in the Act, a quantity of gold to a refinery in Bombay was sent for the purpose of melting. The Customs authorities seized this gold when it was being melted. The gold was found to be of foreign origin and had been imported into India in contravention of the Foreign Exchange Regulation Act, 1947. The Collector of Customs confiscated it under Section 167(8) of the Act. The legality of confiscation was challenged by a petition under Article 226 of the Constitution before the High Court, on the ground that there was no evidence before the Collector to show that the gold had been imported into India after restrictions had been imposed in March 1947 on its importation. The High Court rejected this contention and dismissed the petition. The same argument was advanced before his Court in appeal by special leave. This Court also negatived this contention. While conceding that there was no direct evidence that the gold had been smuggled after March 1947, it was held that a finding to that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y premises is 22 Carat Gold which my workers have informed me they had received from Shri Sanjay Sahoo, contractor of Ms Jayshree Jewellers, NSEZ, Noida. Q. 14 Why was there no records available in the factory premises for the said 2471-grams yellow metal stated to 22 Carat Gold by you? Ans. I state that today i.e. 04.09.2018 visited NSEZ, Noida after two years and the gold was received in my factory without any challan/document through Shri Sanjay Sahoo, Contractor, we were informally doing job-work i.e. making gold chains from the gold received from Ms dayshree Jewellers, NSEZ, Noida off and on for the past two years. The entire activity was being carried out Dy Shri Sujit Kumar Bera, my care taker and other labour after my approval I was not visiting the factory but the work was being carried out in my knowledge and I used to give instructions or they used to talk to my younger brother Shri Sanjeev Jain in my absence telephonically. However, I submit that the entire activity was being carried out on word of mouth basis and there was no written documents / accounts being maintained he entire transaction were carried out verbally, Q.15 Since when you wer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ree General trading company for job work with proper documentation but my contractor Tufan Chandra Pradhan further transferred the gold to Ms S.I. Overseas for job work unofficially. In this incident a letter was received from Customs for strict compliance of sub-contr acting under SEZ provisions. After receiving the above mentioned letter from Customs I never send the goods for sub-contracting without documentation. Q.10 Please state that how goods i.e. gold from your unit were moved to M/s Encee International, Plot No. 158 NSEZ, Noida on 29.08.2018 Ans. I have to state that at around 15.00 Hrs on 28.08.2018 1 arrived at my factory premises in NSEZ and called Mr. Sanjay Kumar Shau, my contractor and apprised him about the import of 27 Kgs of gold and gave him detailed order for making the jewellery. At around 18.30 hrs the said 27 kgs gold was received in the unit and the same was handed over to Shri Shau for making of gold jewellery., Further he told me telephonically ( Mob No. 9971944588) on 20..30 hrs that he would not be able to complete the order in the unit by his own within given time frame and also asked me to send the gold to M/s Encee International for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ween the Member (Judicial) and Member (Technical) on the issues involved in the present appeals, following point of difference is referred to Hon'ble President for the referring to third member for determination of the same. (i) Whether Commissioner (Customs) Noida, is having jurisdiction to adjudicate the present case, Member (Judicial) hold the view against the preposition whereas Member (Technical) is of the view that impugned order cannot be faulted for this reason? (ii) Whether the appeals filed by the four appellants should be allowed as have been held by Member (J) or dismissed as have been held by Member (T)? (Pronounced in open court on - 29/07/2024) Sd/- (P. K. CHOUDHARY) MEMBER (JUDICIAL) Sd/- (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) PER: S.S. GARG MEMBER (JUDICIAL) : 26. The difference on the following two issues recorded in terms of two separate orders passed by two learned Members of the original Division Bench has been placed before me to give my opinion as a Third Member: i. Whether Commissioner of Customs, Noida is having jurisdiction to adjudicate the present case; Member (Judicial) hold that view again....
X X X X Extracts X X X X
X X X X Extracts X X X X
....EZ Act, 2005 ⮚ Notification No. SO 2665 (E) dated 05.08.2016 u/s 21 ⮚ Notification No. SO 2666 (E) dated 05.08.2016 u/s 21 ⮚ Notification No. SO 2667 (E) dated 05.08.2016 u/s 22 ⮚ Section 55 of SEZ Act, 2005 ⮚ GSR 772(E) dated 05.08.2021 SEZ (Amendment) Rules, 2016 ⮚ Rule 47 (5) of the SEZ Rules, 2006 He also submits that after reproducing the above legal provisions, the Member (Technical) has entered a non-speaking finding in para 23.2 of the Interim Order which is recorded as follows: "23.2 From the plain reading of the above provisions and Notification it is evident that provisions of Section 111 and Section 124 of the Customs Act, 1962 have been notified are Section 21(1) of the and the Jurisdictional Commissioner have been notified as the specified officer under Section 21 (2), ibid for investigating the cases under the said Section. Also in terms of Rule 47 of SEZ Rules, 2006, the jurisdictional Custom Officers have been notified for adjudication of the cases." He also submits that the Member (Technical) in his findings, has neither discussed the details of the offen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....DTA; whereas, in the present case, there is no such allegation that the goods were being removed or even attempted to be removed from SEZ for DTA Sales; hence, the facts of the case are clearly distinguishable. 29.8 The learned Counsel further submits that the Member (Technical) in para 23.7 of the Interim Order has given a cryptic finding which is recorded as follows: "23.7 In view of decisions as above I am of the view that Commissioner, adjudicating this case had jurisdiction to proceed against the appellants and the impugned order cannot be faulted for this reason." 29.9 The learned Counsel further submits that the Member (Technical) in para 24.1 of the Interim Order has not appreciated all the facts and circumstances of the case on record. The real facts are as under: a) That the gold was imported legally by appellant No.3; b) That the gold alloy articles for manufacture of jewellery for export were being manufactured in unit of appellant No.1; c) That the appellant No.1 an approved unit of SEZ allowed to undertake the activity of manufacturing of gold jewelry on job work basis, however, the Letter of Approval (LOA) of appellant No.1 h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....one a great change; the provisions of SEZ Act, 2005 have been introduced with overriding provisions in Sections 52 & 53 of SEZ Act, 2005. Also in the case of D. Bhoormull (supra) the goods were alleged to be smuggled, however, in the present case, there is no allegation of smuggling etc; therefore, there is no similarity between the present case and the case of D. Bhoormull (supra). 29.15 The learned Counsel also submits that the Member (Technical) in his findings has selectively extracted the statements of appellant No.2 Shri Rajnish Jain (recorded on 04.09.2018), but ignored the appellant's No.2's letter dated 31.08.2018 and retraction letter dated 08.09.2018 and the statement given during cross examination on 09.05.2019 during the adjudication proceedings. The learned Counsel also submits that the Member (Technical) has also selectively extracted the statements of appellant No.4 Shri Chakshu Sharma (recorded on 12.09.2018), and nothing adverse can be read from the above statement of appellant No.4. The Member (Technical) has also ignored his statement given during cross examination on 09.05.2019. 29.16 The learned Counsel further submits that the irregularity, if a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order absolutely confiscating the disputed gold and imposition of penalties on the appellants, is correct in law and the learned Commissioner who has passed the impugned order has the jurisdiction to adjudicate the matter. 31. I have considered the oral and written submissions made by both the parties containing evidences, statements on record, copies of SEZ Act, 2005 and SEZ Rules, 2006 and notifications; I have also have gone through the opinions recorded by both the learned Members in the Interim Order dated 29.07.2024. According to me, the basic issues involved in the present case are: (A) Whether the impugned order dated 09.07.2019 passed by the Commissioner of Customs absolutely confiscating the gold articles (22 carats) under section 111(o) of the Customs Act, 1962 and imposition of consequential penalties under Sections 112(a)&(b) and 114AA on the ground that jewellery for export was being manufactured by the appellant No.1's NSEZ unit on job work basis, whose LOA had expired and was not renewed, is sustainable in law or not? (B) Whether the disputes regarding subcontracting/sending goods for job work under Rule 41 and Rule 42 of SEZ Rules, 2006 are req....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Act vis a vis GST Act wherein the goods were removed from SEZ to DTA; whereas, in the present case, there is no such allegation; hence the facts of the said case are clearly distinguishable from the facts of the present case. Further, I find that the decision of the Hon'ble Apex Court in the case of D. Bhoormull (supra) relied upon by the learned Member (Technical) is not applicable in the facts and circumstances of the instant case. 36. Further, I find that there are sufficient evidences on record to suggest that M/s Jayashree Jewellers are the owner and importer of the gold because during the search operations on 29.08.2018, Shri Sanjay Sahoo appeared before the Customs Officers and showed them Challan No. 69/2018 dated 28.08.2018, however, the Customs Officers did not take note of the Challan showed by Shri Sanjay Sahoo. Further, on 31.08.2018, Shri Rajnish Jain submitted a letter stating that the disputed gold alloy was received from M/s Jayashree Jewellers for manufacture of jewellery on job work basis. Further, on 04.09.2018, a letter was submitted by M/s Jayashree Jewellers to the Deputy Commissioner, NSEZ, along with Bill of Entry and copy of Challan. Further, Shri Rajn....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on under the Customs Act, 1962 which can be adjudicated by the Commissioner of Customs, Noida for the reasons recorded by the learned Member (Judicial) in para 16.2 and para 16.3 of the Interim Order. 40. In view of my analysis above, I am of the considered view that the opinion expressed by the learned Member (Judicial) is legally correct and I also hold the same view; accordingly, I affirm the findings recorded by the learned Member (Judicial). Further, in my view, the opinion expressed by the learned Member (Technical) is not correct in law. 41. Now, let the matter be placed before the Regular Division Bench for drawing majority view. (Order pronounced in court on 18.12.2024) (S. S. GARG) MEMBER (JUDICIAL) (Order pronounced in open court on -09 January, 2025) (P. K. CHOUDHARY)ARY) MEMBER (JUDICIAL) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) ============= Document 1 GOVERNMENT OF INDIA Ministry of Commerce & Industry, Deptt. Of Commerce Office of the Development Commissioner (Customs Wing) NOIDA SPECIAL ECONOMIC ZONE Noida Dadri Road, Phase II, Noida-201305 SUMMON UNDER SECTION 108 OF THE CUSTOMS ACT. 1962, Dated -07.09.201....