TMI Blog2013 (8) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... to the respondents to levy duties of customs on goods moved from Domestic Tariff Areas into Special Economic Zones, as per the definition found in Section 2 - it would not be proper on the part of the department to levy duties of customs on goods supplied from the Domestic Tariff Areas to the units situated in the Special Economic Zones - If levy of duties of customs are to be made applicable to such goods it could only be by way of appropriate amendments introduced in the Customs Act, 1962, as well as in the SEZ Act – petition decided in favour of assessee. - W.P. Nos. 16990, 17975 and 17976, 18230, 18507, 18697, 18938, 19262, 19338-19345, 20610, 20684, 20867, 21533, 22321, 22413, 22254, 22645, 23947, 24638 and 26605 of 2008 - - - Dated:- 27-4-2012 - M. Jaichandren, J. Shri P.R. Renganath, R. Raghavan and N. Murali, for the Appellant. Shri K. Ramakrishna Reddy, SCGSC, for the Respondent. ORDER Heard the learned counsels appearing on behalf of the petitioners, as well as the learned counsels appearing on behalf of the respondents. 2. The above writ petitions have been filed by the petitioners, being aggrieved by the levying of duty of customs on the goods mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Economic Zones. Such a provision cannot be sustained in the eye of law, since, duties of customs, being export duties, levied under the provisions of the Customs Act, 1962, are required to be paid only when the goods are exported to places outside India, as per Section 12 of the said Act. Further, the definitions of the terms Export , under Clause 18, Export Goods , under Clause 19 and Indian under Clause 27 of Section 2 of the Customs Act, 1962, would make it clear that duties of customs would be applicable only in respect of goods, which are exported out of India. 4. It had been further stated that, even according to the provisions of the Special Economic Zones Act, 2005, there is no scope for the levying of duties of customs, in respect of goods, which are received by the Special Economic Zones from the manufacturers in India. Sections 1, 7, 26 and 30 of the Special Economic Zones Act, 2005, and Rule 27 of the Special Economic Zones Rules, 2006, would make it clear that duties of customs, being export duties, could be levied only in respect of goods, which are exported from a place within India, to a place outside India. As such, duties of customs cannot be levied on goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Economic Zones, as such goods are covered under the provisions of the Special Economic Zones Act. When the term Export defined under Section 2(m) of the Special Economic Zones Act, 2005, does not cover such goods the authorities concerned cannot borrow the definition of the term Export , found in the Customs Act, 1962, to levy duties of customs in respect of the goods in question. 8. Based on the counter affidavits filed on behalf of the respondents, the learned counsels appearing for the respondents had submitted that the main points for consideration in the present batch of writ petitions are as to whether the supplies of goods made to the Special Economic Zones, from the Domestic Tariff Areas, are to be treated as exports , and as to whether such supplies would attract export duty, and whether the impugned letter of the Secretary, Department of Revenue, Ministry of Finance, Government of India, dated 30-6-2008, is illegal and without the authority of law, and offending Articles 19(1)(g) and 265 of the Constitution of India. 9. It has been further submitted that, Section 2 of the Special Economic Zones Act, 2005, deals with the definitions. Section 2(c) defines Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Economic Zones, vide Circular No. 51/2000-Cus., dated 26-5-2000. Paragraph 2 of the said Circular states that the most important feature of the Scheme is that the Special Economic Zones areas shall be deemed to be foreign territories for the purpose of levying of duties and taxes. Therefore, the goods supplied to the Special Economic Zones, from the Domestic Tariff Areas, would be treated as deemed exports. Likewise, the goods brought from the Special Economic Zones to the Domestic Tariff Areas would be treated as imported goods. 12. It had also been stated in the said circular that, as per paragraph 9.30 of the EXIM Policy, goods may be imported/procured from the Domestic Tariff Areas, without payment of duties, for the purpose of manufacturing of goods and services, and for production, processing, assembling, trading, repair, reconditioning, re-engineering, packaging or in connection therewith and export thereof. As such, it was made clear that certain Circulars and Notifications had been issued to implement such policy provisions. However, it was made clear that the duty free import was not applicable to certain prohibited goods, under the EXIM Policy. 13. It had also bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Special Economic Zones Act, 2005, would have overriding effect over the provisions contained in any other Act. Hence, the term export , as defined in Section 2(m) of the Special Economic Zones Act, 2005, would only be applicable to a unit or a Developer in the Special Economic Zones and therefore, supply of goods from the Domestic Tariff Areas to the units or developers in the Special Economic Zones would tantamount to export. 16. It had also been stated that Section 7 of the Special Economic Zones Act, 2005, read with Section 26 of the said Act, would make it clear that the goods or services procured by a Developer or a Special Economic Zone Unit, from the domestic market, shall be exempted from taxes, subject to the fulfillment of certain conditions. The said provisions are given effect to by Rule 27 of the Special Economic Zones Rules, 2006. 17. It had been further stated that Rule 23 of the Special Economic Zones Rules, 2006, states that the supplies from the Domestic Tariff Areas to the Units or Developers, for their authorized operations, shall be eligible for export permit, as admissible under the Foreign Trade Policy, based on the definition of export in Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1962, to impose a levy, in respect of the goods in question, would clearly be against the intention of the legislature. It had also been stated that by imposing the levy on the goods in question, the Special Economic Zone unit would be made to bear an additional burden, contrary to the intention of the makers of the law, which is to encourage export of goods from the Special Economic Zones. 20. It had been further stated that the levy of customs duty, by the authorities concerned, is clearly apposed to the statement made in the preamble to the Import-Export Policy (2004-2009). The objectives of the policy is to neutralize incidents of all levies and duties on inputs used in export products. Section 12 of the Customs Act, 1962, enables the levying of the customs duties only in respect of goods exported from India to a place outside India. As such, the definition of Section 2(19) of the Customs Act, 1962, would confirm that the levy could be made only in respect of goods taken out of India, to a place outside India. Further, the Notification issued on behalf of the Department of Revenue, Ministry of Finance, Government of India, in Notification No. 66/2008-Customs, dated 10-5-200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such terms of law have well recognized meanings. 24. It had also been stated that customs duties would only refer to duties imposed on goods coming into a country, from other countries, or to goods which are going out of a country, to other countries. As such, an intra-country clearance cannot be subject to customs duties, relying on the definition of Exports found in the Special Economic Zones Act, 2005. Any levy made on goods transported from a Domestic Tariff Area unit, to a Special Economic Zone unit, would be equivalent to imposing a tax on intra-state sales, which is the preserve of the State Legislature, under Entry 52, List-II, Schedule-VII of the Constitution of India. The imposing of a levy, if it had been done, as per Entry 97 of List-I of Schedule-VII, it should clearly be an Entry which had not been enumerated, either in List-II or in List-III. Further, the clearances of goods into a Special Economic Zone, from a Domestic Tariff Area, otherwise than by way of sale, would be covered by the legislative field enumerated in Entry 52 of List-II of Schedule-VII of the Constitution of India, and such clearances would be beyond the legislative competence of the Parliament ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) Shyamaraju and Co. (India) Pvt. Ltd. v. Union of India [2010 (256) E.L.T. 193 (Kar.)] (4) Commissioner of C.Ex., Bangalore v. Biocon Ltd. [2011 (267) E.L.T. 28 (Kar.)] 28. In view of the submissions made by the learned counsels for the parties concerned, and on a perusal of the records available, and in view of the decisions cited supra, this Court is of the considered view that the definition of the term Export contained in Section 2(18) of the Customs Act, 1962, would be applicable only in respect of goods taken out of India, to a place outside India. The duties of customs levied under Section 12 of the Customs Act, 1962, could be levied only in respect of such goods which are exported to a place outside India, from an area within India. The said definition cannot be made applicable to such goods, which are supplied to the Special Economic Zones, from the Domestic Tariff areas. Further, the definition of export goods , under Section 2(19) of the Customs Act, 1962, means any goods which are to be taken out of India to a place outside India. As such, it is clear that only in respect of such goods, which are taken out of India, to a place outside India, the levy, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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