2022-TIOL-1448-HC-MUM-CUS
Renaissance Global Ltd Vs UoI
Cus - In all the matters, Sections 111(d) and 111(m) and Section 112(a) and Section 114A of the Customs Act, 1962 have been invoked and penalty imposed - Common issue which arises for consideration is whether petitioners were permitted to import new/unused jewellery for remaking after melting and if the answer is no, then what are the consequences and if the answer is yes, then what will be the further orders - Short point involved is whether petitioner is permitted to import new/unused jewellery for remaking after melting the same – Whereas, the Customs say "no", while the DC says "yes".
Held:
+ Bench is not inclined to relegate petitioner to pursue the alternate remedy in as much as it is settled law that availability of an alternate remedy does not prohibit the High Court from entertaining a writ petition.
+ In the case at hand, the issue is whether respondents have properly exercised jurisdiction and whether the provisions of the Customs Act as stated in the show cause notice are applicable in the facts of the present case.
+ Moreover, there are divergent views taken by two Government of India authorities, viz., Development Commissioner under SEZ Act and the Customs Authorities.
+ Bench has to, therefore, validate which of the conflicting views is correct, that is, whether the view of the DC, respondent no.5, that import of new/unused jewellery for remaking by petitioner was permissible under the SEZ Act and the Rules or whether the provisions of the Customs Act under which the impugned order has been passed.
+ Moreover, over 13 years have passed since filing of the petition and if after 13 years petitioner is directed to exhaust any alternate remedy, it would cause grave injustice to petitioner. [para 20]
+ In terms of Rule 27(1) of the SEZ Rules, a SEZ unit is entitled to import without payment of customs duty all goods which are required for its authorised operations except goods which have been specifically prohibited under the "Import Trade Control (Harmonized System) Classifications of Export and Import Items". Therefore, only those goods which are prohibited under a notification issued under Section 5 of the FTDR Act will be construed as being "prohibited" for the purpose of the SEZ Act.
+ Respondents have been unable to show any such notification issued under Section 5 of the FTDR which prohibits import of finished jewellery. Therefore, the jewellery imported by petitioner without payment of customs duty was a permissible import in terms of Rule 27(1) of the SEZ Rules.
+ It is clear from Rule 29(5) of the Rules that the term 'Goods' includes jewellery and hence qualifies for import for authorized activity of manufacture of jewellery under Rule 27(1) of the SEZ Rules. [para 27]
+ In view of what is stated in Rule 27 of the SEZ Rules, it is patently clear that only the DC (respondent no.5) can decide whether any goods or services as required by a unit or developer are for authorised operations or not.
+ This position has also been clarified by the DC (respondent no.5) vide letter dated 22nd May, 2009 addressed to the Commissioner of Customs, Sahar Airport. However, respondent no.2, even though being fully aware of this position, has failed to consider the said letter while adjudicating the case and passing the impugned order. [para 29]
+ In the facts of the present case, there is absolutely no misdeclaration between the description and / or value declared in the Bill of Entry and the goods actually imported by petitioner, both being diamond studded gold and silver jewellery. Question of invoking Section 111(d) and 111(m) of the Customs Act does not arise at all in the present case. [para 32, 33]
+ Apart from making sweeping and bald statements, both in the show cause notice as well as in the impugned order, respondent no.2 has not dealt with the issue of demanding customs duty under Section 28 of the Customs Act at all.
+ Respondent no.2 has arbitrarily invoked Section 28 that too by way of a Corrigendum to the show cause notice, without even dealing with as to how violations, if any, of provisions of SEZ Act or SEZ Rules, disturbs the blanket exemption available to petitioner in terms of Section 26 of the SEZ Act. [para 36]
+ Customs duty under Section 28 of the Customs Act can only be imposed on imports into SEZ if the exemption under Section 26 of the SEZ is withdrawn. However, since there is not a whisper in either the show cause notice or impugned order of such withdrawal of exemption, duty under Section 28 of the Customs Act, cannot be demanded from petitioner. [para 37]
+ In case the conditions of the LOP had been breached, until and unless the SEZ permission was cancelled and the area was delicensed by the DC, it cannot be said that the customs duty exemption will not be available to petitioner. [para 38]
+ Petitioner's SEZ license has not been cancelled under Section 16(1) till date, let alone during the impugned period. Accordingly, petitioner has rightly and legally continued to avail of the customs duty exemption under Section 26 of the SEZ at all points in time. [para 40]
+ The show cause notice did not even propose to impose penalty under Section 114A of the Customs Act. However, despite the same respondent no.2 has imposed penalty under Section 114A of the Customs Act in the impugned order. It is settled law that the impugned order cannot traverse beyond the show cause notice. On this count itself, the imposition of penalty under section 114A of the Customs Act ought to be set aside [para 41, 42]
+ Impugned notices dated 14th July 2009 read with the addendums dated 21st July 2009 and addendum/corrigendum dated 18th August 2009 to the impugned notice, as well as the impugned orders dated 18th August 2010/19th August 2010 in all petitions are quashed and set aside. [para 43]
+ Bank Guarantees are directed to be cancelled and returned to petitioners within eight weeks. [para 44]
- Petitions disposed of: BOMBAY HIGH COURT |
