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2014 (2) TMI 285 - AT - CustomsSetup of SEZ - meaning and scope of the term 'additional area' - Removal of Goods from SEZ to DTA area for storage without payment of duty under permission - movement of Goods from DTA to another DAT area called Refinery Tank Farm (RTF) was considered as contravention of Rules - Confiscation u/s 111 - Penalty u/s 112 - Imposition of redemption fine u/s 125 - Violation of terms of the permissions granted under Rule 50 (1) (e) of the SEZ Rules, 2006 - Held that:- Notification dated 04.06.2007 should relate back to 19.04.2006. In view of this, the construction activities conducted in the additional area will have to be deemed as carried out within the SEZ. The permission granted under Rule 50 (1) (e) as also the conditions laid down therein will become irrelevant in view of the subsequent action of notifying the additional area as part of the existing SEZ. SEZ Unit is not required to file a Bill of Entry or pay duty on the goods removed temporarily under the above referred rules. The entire purpose of the above-referred rule is to ensure that the goods which are permitted to be cleared to the DTA are returned back to the SEZ, so that they are ultimately used only for the required purpose of undertaking "authorized operation" within the SEZ. The "authorized operation" within the SEZ, insofar as the assessee is concerned, is the activity of refining Crude oil so as to obtain various Refined end-products such as gasoline, diesel etc. If the goods which were removed from the Zone to the DTA were ultimately received back into the SEZ and were finally used only for SEZ's authorized operation, the object behind the permission stood achieved and fulfilled. Steel materials were used for the purpose of construction of storage tanks in the RTF. Such storage tanks were still under construction on 04.06.2007, when the additional land was notified to be part of the SEZ. As such, neither the storage tanks nor the steel materials used for their construction had been used or utilized for any purpose other than the originally contemplated purpose of setting up a refinery in the SEZ. We also take note of the fact that before effecting any removal of goods in terms of the permission granted to it, the Developer had informed the Ministry of Commerce on 03.08.2006 that construction activity was proposed to be undertaken in the additional area. Even in the applications filed by the assessee on 18.10.2006, the fact that construction activity was being undertaken by using the steel materials was disclosed. Since entire operation of the appellant was relatable back to the SEZ notification dated 19.04.2006, therefore, impugned order confiscating the goods, levy of interest and the penalties on other two appellants is not sustainable and is liable to be set aside - Decided in favour of assessee. It cannot be said that there is no machinery to recover the duties of Customs/Central Excise under the SEZ Act 2005 and the Rules made thereunder and the Bond-cum-Legal undertaking, given by the appellants to the authorities implementing the SEZ Act 2005 and the SEZ Rules 2006, is available to enforce the dues if utilization of duty free goods received is not satisfactorily explained and such recovery will not be time barred, However, this power to invoke and enforce the Bond-cum-Legal undertaking, is available only to the appropriate authorities working under the SEZ Act 2005 and the SEZ Rules 2006 and cannot be made use of by other authorities working under the Customs Act, 1962 to demand duties under Section 28 that acts.
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