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2015 (11) TMI 1466 - GUJARAT HIGH COURT

2015 (11) TMI 1466 - GUJARAT HIGH COURT - 2015 (330) E.L.T. 883 (Guj.) - Levy of customs duty on goods cleared from SEZ to DTA and non-processing area of the SEZ - retrospective levy - Challenge the constitutionality and legality of Government Notification No.25/2010-Customs dated 27.2.2010 - levy of customs duty at the rate of 16% advalorem has been levied on electrical energy removed from Special Economic Zone - The power supply from the power plant which is inside the SEZ area from where the .....

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ion and it would be in violation of Article 265 of the Constitution of India.

Custom duty at the rate of 16% advalorem levied by Notification dated 27.2.2010 could not be imposed retrospectively w.e.f. 26.6.2009 and, therefore, retrospective amendment is illegal and arbitrary and deserves to be set aside.

Petitioner is entitled for exemption from payment of custom duty for the period 26.6.2009 to 15.9.2010 on the electricity cleared to DTA from SEZ. We are further of the .....

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titution of India, Section 12 of Customs Act, 1962 and Section 30 of SEZ Act, 2005 as well as Articles 14 and 265 of the Constitution of India and consequently deserves to be quashed and set aside. - Decided in favour of assessee. - Special Civil Application No. 3142 of 2010 - Dated:- 15-7-2015 - Vijay Manohar Sahai, ACJ And R. P. Dholaria, JJ. For the Petitioner : MR Kamal B Trivedi, Senior Counsel assisted by Mr Uday Joshi For the Respondents : Mr Devang Vyas, learned Assistant Solicitor Gener .....

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itioner No.1 - M/s. Adani Power Limited (for short 'the Company') is a Company incorporated under the provisions of the Companies Act, 1956 and is engaged in the activity of generating, transmitting and selling electrical energy. The petitioner No.2 is an Indian citizen and is shareholder of the Company. The plant of the Company is situated in Mundra Port and Special Economic Zone. The electricity generated, as permissible, is cleared/transferred from the Special Economic Zone to Domesti .....

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ial Economic Zone Rules, 2006 (for short 'SEZ Rules') lays down that "infrastructure" means facilities needed for development, operation and maintenance of the Special Economic Zone and includes industrial, business and social amenities like development of land, roads, buildings, sewerage and effluent treatment facilities, solid waste management facilities, port, including jetties, single point moorings, storage tanks and inter-connecting pipelines for liquids and gases, Inland .....

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hectares and electricity is required for both processing and non-processing areas. The Company therefore joined as Co- Developer to set up the Mundra Power Plant which is a coal based thermal power plant. This project was initially planned to generate 1320 MW which was increased to 2640 MW and ultimately to 4620 MW. In the year 2010, the petitioner Company was in the process of setting up thermal power plant with total capacity of 4620 MW, out of which two units of 330 MW each have been commiss .....

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cle 14, 19(1)(g) and Article 265 of the Constitution of India. The petitioner has also prayed that Notification No.21/2002 dated 1.3.2002 Serial No.573 as amended by Clause 60 of the Finance Act, 2010 read with Notification No.25/2010- Customs dated 27.2.2010 and had further prayed for quashing of the letters dated 26.2.2010 and 3.3.2010 issued by Specified Officer, MPSEZ, Mundra, Annexure D and F respectively to the petition. 6. We have heard Mr. Kamal B. Trivedi, learned Senior Counsel assiste .....

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7 entitled as "mineral fuel, mineral oils etc." He further urged that Section 30(a) provides that if any goods are removed from a Special Economic Zone to the Domestic Tariff Area, such goods will be chargeable to duties of customs including anti-dumping, countervailing and safeguard duties under the Customs Tariff Act, 1975 as leviable on such goods when imported, meaning thereby that if any goods are removed from the Special Economic Zone area to the Domestic Tariff Area, then the pr .....

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Meaning thereby, with regard to tariff Item No.27160000 if the goods are imported in India, then those goods will be exempted from payment of customs duty. If we apply the same analogy to Section 25(1) of the Customs Act, 1962, which provides for exemption from payment of customs duty and in view of Section 30(a) since the goods are being brought from the Special Economic Zone to Domestic Tariff Area, then it has to be treated as imported goods which has come from outside India and, therefore, i .....

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proviso to Notification dated 27.2.2010 exempted electrical energy which is imported into India from the whole of payment of customs duty. It is urged by the counsel for the petitioners that the proviso to Notification No.25/2010 Customs, New Delhi dated 27.2.2010 is violative of provisions of Section 25(1) of the Customs Act, 1962 and arbitrarily imposes customs duty treating electrical energy falling under Tariff Item No.20170000 removed from the Special Economic Zone to the Domestic Tariff Ar .....

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of the zone retrospectively w.e.f. 26.6.2009 as the duty was not known to be payable prior to 27.2.2010. The levy of custom duty is illegal as it amounts to levying custom duty on electrical energy which can only be levied by a substantive provision of law and custom duty could be levied only prospectively and not retrospectively. The Central Government realized that custom duty @ 16% was onerous and by Notification No.91 of 2010 Cus. Dated 16.9.2010 reduced the duty to 10 paisa per unit. The c .....

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excess of 1000 MW is classified as Mega Power Plant (for short 'the MPP'). All MPPs are allowed to import or indigenously procure Capital Goods duty free as per Notification No.21/2002 dated 1.3.2002 for Customs Duty exemption and Notification No.6/2006 dated 1.3.2006 for excise duty benefit. The Company imported as well as indigenously procured Capital Goods (coal etc.) without payment of duty, customs and excise as the case may be, as provided under the provisions of SEZ Act and the S .....

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ed into, or service provided in, a Special Economic Zone or a Unit, to carry on the authorized operations by the Developer or entrepreneur; (b) exemption from any duty of customs, under the Customs Act, 1962 (52 of 1962) or the Customs Tariff Act, 1975 (51 of 1975) or any other law for the time being in force, on goods exported from, or services provided, from a Special Economic Zone or from a Unit, to any place outside India; (c) exemption from any duty of excise, under the Central Excise Act, .....

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by the service providers located outside India to carry on the authorized operations by the Developer or entrepreneur; (e) exemption from service tax under Chapter V of the Finance Act, 1994 (32 of 1994) on taxable services provided to a Developer or Unit to carry on the authorized operations in a Special Economic Zone; (f) exemption from the securities transaction tax leviable under section 98 of the Finance (No. 2) Act, 2004 (23 of 2004) in case the taxable securities transactions are entered .....

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s Act, 1962 or the Customs Tariff Act, 1975 on goods imported into SEZ area by the developer or entrepreneur or goods exported or services provided within the SEZ zone or from a Unit. (i) Section 26(1)(c) and (d) provided exemption for payment of excise duty under the Central Excise Act, 1944 or the Central Excise Tariff Act, 1985 on goods brought from the Domestic Tariff Area to a SEZ area or a unit within the SEZ area by the developer or entrepreneur. It also provided that drawbacks and other .....

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ices Centre. It also provided that exemption from levy of taxes on sale or purchase of goods other than newspapers under the Central Sales Tax Act, 1956. (iii) All these exemptions were provided to every Developer and entrepreneur to claim exemptions, drawbacks and concessions where either the goods were imported from outside India to SEZ area or goods exported from SEZ area to outside India. (iv) From the aforesaid facts, it is clear that the Act clearly provided exemptions to a Developer or th .....

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or a unit situated within the SEZ area if it removes any goods from SEZ to DTA than duty or tax was leviable on the Developer or the unit. 13. The petitioner had commissioned two units of 330 MW each at Mundra Plant. A part of the electricity is sold outside the SEZ to Gujarat Urja Vikas Nigam Limited (GUVNL), a Distribution Company/ Licencee of the Government of Gujarat and others. Section 30 of the SEZ Act provides for levy of duty on goods removed from SEZ area into DTA. 14. From the perusal .....

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goods at the rate of duty and tariff valuation which was in force as on the date of removal and if the date is not certain, then on the date of payment of duty. 15. The expression "import" had been defined in Section 2(23) of the Customs Act, 1962 as under :- "2(23) "import", with its grammatical variations and cognate expressions, means bringing into India from a place outside India;" 16. Section 2 (o) of the SEZ Act defines the expression "import" which .....

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t under the Customs Act, if any goods are brought within the territory of India, then on it, customs duty shall be levied at such rate as may be specified under the Custom Tariff Act, 1975 under the law in force at that time on the goods imported into India, whereas under the SEZ Act, import is permissible within the SEZ area by Unit or a Developer or receiving of goods or services by a Unit or a Developer from another Unit or Developer of the same SEZ or a different SEZ. But it would be treated .....

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to India, which means, goods brought from a territory outside India into India. 19. A conjoint reading of Entry 83 of List I of Schedule VII and Section 12 of the Customs Act shows that the levy under the said Act is on goods which are physically imported from territory outside India into India. On the other hand, duty under Section 30 of the SEZ Act is not on import of goods into India because the word "import" as defined in the SEZ Act does not cover removal of goods from SEZ in DTA. .....

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ct for the time being in force in relation to the goods sought to be removed from SEZ into DTA. 20. By virtue of Entry 83 of List I of Schedule VII to the Constitution of India, the said Act has been enacted to provide for levy of customs duty on goods imported into India. The word "import" in the context of Entry 83 of List I means bringing into India from a territory outside India. This is also the scope and ambit of the charging section. The customs duty under Section 12 of the Cust .....

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hin the powers of the Central Government for levy of custom duty on such goods at the rate expressed in a form of method that provides for statutory custom duty. [Refund of custom duty paid in respect of mineral oil under sub-section (7) of Section 25 shall not be made.]. It is urged by the petitioners that the goods removed from SEZ into DTA or non-processing areas of SEZ are not imported into India as defined under Section 2(23) of the Customs Act. The custom duty can only be levied under the .....

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into DTA or non-processing areas of SEZ cannot be levied under the Customs Act on account of the legislative mandate under Entry 83 of List 1 of Schedule VII to the Constitution of India. The impugned Notification is thus unconstitutional and ultra vires Entry 83 of List I of Schedule VII of the Constitution of India. 22. Before we examine the rival contentions of learned counsel for the parties, we deem it necessary to advert to Rule 47(3) of the SEZ Rules which provides for payment of customs .....

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for sale of surplus power received by the Development Commissioner, shall be examined in consultation with the State Electricity Board, wherever considered necessary; PROVIDED that consultation with State Electricity Board shall not be required for sale of power within the same Special Economic Zone; (b) norms for production of a unit of power shall be approved by the Approval Committee; (c) sale of surplus power to other Unit or Developer in the same or other Special Economic Zone or to Export .....

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the power plants located within SEZ to be at par with power plants located outside SEZ, both being located within India. Just as MPP imports or procures capital goods without payment of duty, but pays customs duty or excise duty, on the raw materials and consumables used to generate electricity so also MPP located within SEZ imports or procures capital goods without payment of duty but is required to pay duty on raw materials and consumables to the extent the electricity generated by it is remov .....

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G.S.R. 92(E) dated the 1st March 2006, issued under sub-section (1) of section 25 of the Customs Act, shall stand amended and shall be deemed to have been amended retrospectively, in the manner specified in column (3) of the Second Schedule, on and from the corresponding date specified in column (4) of that Schedule, against each of the notifications specified in column (2) of that Schedule. (2) For the purposes of sub-section (1), the Central Government shall have and shall be deemed to have th .....

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tion, notification or order and no enforcement shall be made by any court, of any decree or order relating to such action taken or anything done or omitted to be done as if the amendment made in said notifications had been in force at all material times. (4) Recovery shall be made of the amount which has not been paid but which would have been paid as if the amendment made in the manner specified in said sub-section (1) had been in force at all material times. Explanation :- For the removal of d .....

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e annexed to the said Notification. This Notification was amended with effect from 26.6.2009, splitting Serial No.573 of the Table of Notification dated 1.3.2002 with retrospective effect from 26.6.2009 by Notification No.25 of 2012-Customs GSR (E) dated 27.2.2010 which is reproduced as under :- "THE SECOND SCHEDULE [See section 60(1)] Notification number Amendment Date of and date effect of amendment (2) (3) (4) G.S.R. number 118 (E) Dated 1st March, 2002 [21/2002-Customs, Dated 1st March, .....

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omic Zone 16% - 573 A 2716 00 00 All goods, other than goods mentioned at S. No.573 Nil - 27. The aforesaid entries at Serial No.573 was split in two parts, 573 and 573A which was substituted (w.e.f. 26.6.2009) by Section 16 read with 2nd Schedule to the Finance Act, 2010 (14 of 2010) with validating and saving provision. Serial No.573 provided that customs duty at the rate of 16% would be levied on the electrical energy removed from a Special Economic Zone into Domestic Tariff Area or non-proce .....

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7.2.2010, GSR (E) exercising powers under subsection (1) of Section 25 of the Customs Act, 1962 in public interest exempted goods falling under Tariff Item No.27160000 of the First Schedule to the Customs Tariff Act, 1975 when imported into India from the whole of the duty of customs leviable on it. However, a proviso was added to this notification that this exemption under Tariff Item No.27160000 shall not apply to electrical energy removed from a Special Economic Zone to the Domestic Tariff Ar .....

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ent of duty from SEZ to DTA and non-processing areas of SEZ w.e.f. 26.6.2009. This letter dated 26.2.2010 was written by the Specified Officer, MPSEZ, Mundra one day prior to issuance of the exemption notification No.25/2010-Customs dated 27.2.2010. The Specified Officer on 3.3.2010 stated in his letter that the petitioner is not entitled to exemption provided by Notification No.25/2010- Customs dated 27.2.2010 directed the petitioners to file the Bill of entries for electrical energy cleared fr .....

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All goods Nil - 30. The impugned Notification, however, now provides for levy of customs duty at the rate of 16% advalorem on electrical energy removed from SEZ into DTA or non-processing areas of SEZ whereas electrical energy imported from outside India continues to be wholly exempted i.e. chargeable Nil rate of duty when imported from outside India. For this reason, the impugned Notification seeks to split and/or bifurcate the existing Entry 573 into 573 and 573A is illegal and arbitrary. Ent .....

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fect has been given to Serial No.573 of Notification No.21/2002-Cus dated 1.3.2002, which when read with Notification No.25/2010-Cus has the effect of levying 16% customs duty on electrical energy removed from SEZ into DTA or removal to non-processing areas within SEZ. All references to the said Notification shall mean and include and refer to Notification No.21/2002-Cus as amended by Clause 60 of Finance Bill, 2010 read with Notification 25/2010-Cus dated 27.2.2010. The said Notification has im .....

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s working out the mechanism and procedure for fulfillment of conditions and, therefore, presented a Bond for the purpose of considering removal of electricity from Special Economic Zone to Domestic Tariff Area. Thereafter, the petitioner Company received a letter dated 3.3.2010 returning the aforesaid bond presented before the respondent No.4 and further requesting the petitioner Company to file Bills of Entry for the Electrical Energy cleared from 27.2.2010 onwards and pay applicable duty immed .....

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t only to provide for levy of customs duty on goods imported from a country or territory outside India, into India. It is also equally settled law that liability and exemption are two different aspects as held by the Apex Court in Associated Cement Company v. State of Bihar and others, 2004 (7) SCC 642. The question of exemption arises only after the liability is fixed. If there is no liability, the question of exemption does not arise at all. There is no liability of developers and units situat .....

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e impugned Notification is a piece of delegated or subordinate legislation and, therefore, cannot travel beyond the provisions of the charging Section. 34. Section 30 of the SEZ Act is divided into two parts. First part creates liability only on removal of goods from SEZ to DTA. Section 30 does not provide for levy of duty on goods removed from SEZ processing area into non-processing areas. To the extent of Section 30 provides for levy of duty on goods removed from SEZ into DTA for the purposes .....

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s. Section 30 of the SEZ Act does not refer to the word "import". Section 30 of the SEZ Act does not provide for levy of goods imported into SEZ as per the word "import" defined in SEZ Act. For goods imported into SEZ, customs duty is levied under Section 12 of the said Act, but on account of Section 26 of the SEZ Act, there is an exemption from payment of such customs duty. The provisions of Section 12 of the said Act are applicable to SEZ only in so far as and limited to im .....

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her role to play. Consequently, when goods are removed from SEZ into DTA, it is the provision of Section 30 of the SEZ Act which shall prevail. This is also provided for in Section 51 of the SEZ Act which contains the overriding provision. Section 51 of the SEZ Act provides that notwithstanding anything contained in any other law for the time being, the provisions of SEZ Act shall prevail. Therefore, the Parliament cannot make any law providing for levy of customs duty on removing the goods from .....

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is discriminatory in as much as electrical energy imported into India from a place outside India continues to be wholly exempted from payment of customs duty. There is no rational or intelligible differentia in levying customs duty on electrical energy removed from SEZ into DTA or nonprocessing areas of SEZ. Even on the assumption that removal of goods from SEZ into DTA or non-processing areas of the SEZ amounts to "Import" into India. There is no difference between power producers in .....

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f whether they are situated outside or inside SEZ the duty is payable on the raw materials and consumables by both to the extent the power is sold in DTA. The Mundra plant being a MPP stands on the same footing and similarly circumstanced as other MPPs in India. Therefore, there is no justification for discriminating against MPP situated inside a SEZ. 37. The impugned Notification amounts to double taxation in as much as the petitioners continue to be liable for payment of duty of raw materials .....

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nergy removed from a Special Economic Zone to a Domestic Tariff Area or non-processing area of Special Economic Zone w.e.f. 26.6.2009. In fact, levy customs duty @ 16% is part of the Finance Bill and has not become an Act. Under the circumstances, the demand of customs duty raised by the respondent No.4 on the basis of such a Bill is not sustainable in as much as a Bill is a proposal for levy of the Tax. 38. That Section 30(a) of the SEZ Act provides that any goods removed from SEZ to DTA shall .....

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EZ to DTA was made 16% whereas, vide Entry at Serial No.573A, all goods other than those mentioned under Entry at Serial No.573 were exempted from customs duty. The said Notification No.21/2002 has been issued under Section 25 of the Customs Act, 1962. Thus, when Section 30 of the SEZ Act itself provides for levying duty on any goods removed from SEZ to DTA, as leviable on goods when imported, such a duty @ 16% could not have been made applicable in as much as with regard to all goods other than .....

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as per the provisions of Customs Act, 1962. This apart, notification issued under Section 25 of the Customs Act could not have been amended by Clause 60 of the Finance Bill, 2010 since under Section 25 of the Customs Act, the powers are with the Central Government. 39. The facts which emerge from the records of the case are that the petitioner No.1 is a Company, engaged in the business of generating, transmitting and selling electrical power and started clearance of electricity from June 2009 to .....

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e letter dated 26.2.2010 requested to pay duty immediately with retrospective effect from 26.6.2009 as in the Union Budget 2010, electrical energy removed from Special Economic Zone to Domestic Tariff Area and non processing areas of the zone would attract duty of 16% advalorem and this change is being made retrospectively with effect from 26.6.2009. In response, the petitioner Company informed the Specified Officer on 27.2.2010 that they are working out a mechanism and procedure for fulfillment .....

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electrical energy cleared from 26.2.2009 and to pay applicable duty. Being aggrieved by the aforesaid Government Notification, the petitioners have filed the present petition. 41. Mr. Kamal B. Trivedi, learned Senior Counsel appearing for the petitioners drew our attention to various statutory provisions and argued that the petitioner Company being a SEZ unit cannot be saddled with such duty liability. He submitted that charging section i.e. Section 12 of the Customs Act, 1962 does not apply to .....

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the SEZ Act is not customs duty and the said section merely refers to the rates of applicable customs duty to like goods when imported into India and for goods removed from SEZ to DTA. However, the Government Notification dated 27.2.2010 levying customs duty on electrical energy removed from SEZ to DTA seeks to amend Section 30 of the SEZ Act, which is not permissible and in fact, the said Section provides for exemption from payment of duty since similar goods are not chargeable to such duty whe .....

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ion 30 of the SEZ Act is a charging Section akin to Section 12 of the Customs Act, 1962. In fact, the duty is being charged under Section 30 of the SEZ Act and not under Section 12 of the Customs Act, 1962 or any notification. The reference to the Customs Tariff Act under Section 30 of the SEZ Act is only with reference to a measure and not the chargeability of duty. The provisions of Section 30 provide that the goods cleared from SEZ to DTA are chargeable to duty as is leviable to the goods imp .....

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a) provides that any goods removed from SEZ to DTA shall be chargeable to customs duties, etc. as leviable on such goods when imported. Section 30(b) provides that the rate of duty applicable shall be the rate on the date of removal. The said section, therefore, incorporates by reference rates of customs duties as applicable when goods are imported into India from outside India for goods removed from SEZ to DTA and that the levy of duty is not under the Customs Act. Section 51 of the SEZ Act giv .....

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v. Union of India and others, has dealt with a similar controversy. In the said judgment, the question was where local manufacturers were exempt from payment of excise duty, whether liability to pay duty would continue on SEZ units and it has been observed that the same has to be seen from the language of Section 30 of SEZ Act and that Section 51 of the SEZ Act gives overriding effect to the provisions of the SEZ Act. Considering this, it has been held that SEZ units will have no liability to p .....

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d levy of customs duty, under Section 25(1) of the Customs Act, 1962 on electrical energy cleared/transferred from SEZ to DTA which is not permissible, more particularly when there has been no customs duty on importation of electrical energy from outside India. 46. The impugned Government Notification No.25/2010- Customs dated 27.2.2010 reads as under :- "Notification New Delhi, the 27th February, 2010 No.25/2010-Customs G.S.R. (E). - In exercise of the powers conferred by sub-section (1) o .....

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r tariff item 27160000 removed from a Special Economic Zone to the Domestic Tariff Area or non-processing areas of Special Economic Zones. [F. No.334/1/2010-TRU] Sd/- (Prashant Kumar) Under Secretary to Government of India" 47. The SEZ Act was enacted with a view to provide an internationally competent environment for exports and for promoting export led growth. The term "Domestic Tariff Area" is defined in Section 2(i) as to mean the whole of India (including the territorial wate .....

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h contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. Sub-section (1) of Section 53 provides that a SEZ shall on and from the appointed day be deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorized operations. Chapter IV of the SEZ Act pertains to special fiscal provisions for SEZs. Section 26 contained in the said Chapter grants exemptions, drawbacks and conces .....

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d duties under the Customs Tariff Act, 1975 (51 of 1975), where applicable, as leviable on such goods when imported; and (b) the rate of duty and tariff valuation, if any, applicable to goods removed from a Special Economic Zone shall be at the rate and tariff valuation in force as on the date of such removal, and where such date is not ascertainable, on the date of payment of duty." 48. Thus, from the above, it can be seen that in order to give an impetus to exports, the SEZ Act was enacte .....

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not in dispute that by virtue of Government Notification dated 1.3.2002, electrical energy was exempted from payment of whole of Customs duty. This notification is sought to be replaced by Government Notification No.25/2010-Customs dated 27.2.2010. 50. Chapter V of the Customs Act, 1962 relates to levy and exemption from customs duties. Section 12 pertains to dutiable goods, which is reproduced below :- "Section 12. Dutiable goods. - (1) Except as otherwise provided in this Act, or any othe .....

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o grant exemption from payment of customs duty. Section 25(1) of the said Act reads as under :- "25. Power to grant exemption from duty :- (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part .....

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y rescinds the notification of the Government of India in the Ministry of Finance (Department of Revenue) no.25/2010-Customs, dated the 27th February, 2010, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 138(E) dated the 27th February, 2010, except as respects things done or omitted to be done before such rescission." 53. However, from the above statutory provisions, it can be seen that by virtue of Section 30 of the SEZ Act, a SEZ u .....

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d be leviable as if the goods cleared by SEZ unit to the DTA are in the nature of imports. If, therefore, by virtue of an exemption notification, the whole of customs duty payable is exempted, then no customs duty would be payable on import of such goods. Even otherwise, Section 51 of the SEZ Act gives overriding effect to the provisions of the Act. 54. Section 30(a) of the SEZ Act provides that if any goods are removed from SEZ to DTA, such goods will be chargeable to duties of customs includin .....

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emption in public interest to the goods falling under the tariff Item No.27160000 of the First Schedule to Customs Tariff Act, 1975 from whole of the duties which are specified in the First Schedule. Meaning thereby, with regard to tariff item No.27160000 if the goods are imported in India, then those goods will be exempted from payment of customs duty. If we apply the same analogy to Section 25(1) of the Customs Act, 1962 which provides for exemption from payment of customs duty and in view of .....

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s exemption from payment of customs duty. It is not disputed by the respondents that proviso to Government Notification No.25/2010-Customs dated 27.2.2010 exempted electrical energy which is imported into India from the whole of payment of customs duty. Therefore, proviso to Government Notification No.25/2010-Customs dated 27.2.2010 is violative of provisions of Section 25(1) of the Customs Act, 1962 and arbitrarily impose customs duty treating electrical energy falling under Tariff Item No.2017 .....

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f List I of Seventh Schedule of the Constitution of India, Section 12 of Customs Act, 1962 and Section 30 of SEZ Act, 2005 as well as Articles 14 and 265 of the Constitution of India and consequently deserves to be quashed and set aside. 55. There is yet another aspect of the matter which has been argued before us. It has been urged by Mr. Kamal B. Trivedi, learned counsel for the petitioners that customs duty could not be levied retrospectively. The power and competence of the Parliament to ame .....

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on the merits of the amendment in the light of the facts and circumstances under which such amendment is made. In considering the question as to whether the legislative power to amend a provision with retrospective operation has been reasonably exercised or not it, becomes relevant to enquire as to how the retrospective effect of the amendment operates. 56. Where there is challenge to the constitutional validity of a law enacted by the legislature, the Court must keep in mind that there is alway .....

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of Article 14 in relation to invalidation of legislation. The two dimensions of Article 14 in its application to legislation and rendering legislation invalid are now well recognized and these are (i) discrimination, based on an impermissible or invalid classification and (ii) excessive delegation of powers; conferment of uncanalised and unguided powers on the executive, whether in the form of delegated legislation or by way of conferment of authority to pass administrative orders if such confer .....

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Swamy v. Director, Central Bureau of Investigation and another (2014) 8 SCC 682 after considering catena of decisions on Article 14 has laid down the law as to on what ground a Legislation could be quashed under Article 14 of the Constitution of India. 57. We may now examine as to the Notification dated 27.2.2010 which levied customs duty 16% advalorem w.e.f. 26.6.2009 would operate retrospectively or prospectively. The Constitutional Bench of the Apex Court in Commissioner of Income Tax (Centra .....

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be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his pl .....

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also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant i .....

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ra and others (2006) 6 SCC 286. It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are not confronted with any such situation here. 57.2 In such cases, retrospectively is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectivity. In the instant case, the proviso added .....

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nct implication. Dogmatically framed, the rule is no more than a presumption, and thus could be displaced by out weighing factors. 57.3 Let us sharpen the discussion a little more. We may note that under certain circumstances, a particular amendment can be treated as clarificatory or declaratory in nature. Such statutory provisions are labeled as "declaratory statutes". The circumstances under which a provision can be termed as "declaratory statutes" is explained by Justice G .....

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lly held to be retrospective. The usual reason for passing a declaratory Act is to set aside what Parliament deems to have been a judicial error, whether in the statement of the common law or in the interpretation of statutes. Usually, if not invariably, such an Act contains a preamble, and also the word 'declared' as well as the word 'enacted'. But the use of the words 'it is declared' is not conclusive that the Act is declaratory for these words may, at times, be used t .....

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ttled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended. The language 'shall be deemed always to have meant' is declaratory, and is in plain terms retrospective. In the absence of clear words indicating that the amending Act is declaratory, it would not be so construed when the pre-amended provision was clear and unambiguous. An amending Act may be purely clarificatory to clear a meaning of a provision of the principal A .....

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he nature of amendment to Section 29 (2) of the Bombay Rents, Hotel and Lodging House Rates Control Act as amended by Gujarat Act 18 of 1965, observed as follows :- "The amending clause does not seek to explain any pre-existing legislation which was ambiguous or defective. The power of the High Court to entertain a petition for exercising revisional jurisdiction was before the amendment derived from S.115, Code of Civil Procedure, and the legislature has by the amending Act attempted to exp .....

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e into force : "11. Now it is a well settled rule of interpretation hallowed by time and sanctified by judicial decisions that, unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. The general rule as stated by Halsbury in Vol. 36 of the Laws of England (3rd Edn.) .....

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expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only." 57.6 In the case of C.I.T., Bombay v. Scindia Steam Navigation Co. Ltd. [1962 (1) SCR 788], this Court held that as the liability to pay tax is computed according to the law in force at the beginning of the assessment year, i.e., the first day of April, any change in law affecting tax liability after that date though made during the currency of the assessment year, unless s .....

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rred. This is a well established principle of statutory interpretation, to help finding out as to whether particular category of assessee are to pay a particular tax or not. No doubt, with the application of this principle, Courts make endeavour to find out the intention of the legislature. At the same time, this very principle is based on "fairness" doctrine as it lays down that if it is not very clear from the provisions of the Act as to whether the particular tax is to be levied to .....

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d against imposition of the tax. In Billings v. U.S.[232 U.S. 261, at p.265, 34 S.Ct. 421 (1914)], the Supreme Court clearly acknowledged this basic and long-standing rule of statutory construction : "Tax Statutes... should be strictly construed, and, if any ambiguity be found to exist, it must be resolved in favor of the citizen. Eidman v. Martinez, 184 U.S. 578, 583; United States v. Wigglesworth, 2 Story, 369, 374; Mutual Benefit Life Ins. Co. v. Herold, 198 F. 199, 201, affd 201 F. 918; .....

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employed is most important, for such statutes are not to be extended by implication beyond the clear import of the language used. If the words are doubtful, the doubt must be resolved against the Government and in favor of the taxpayer. Gould v. Gould, 245 U.S. 151, 153" 57.10 As Lord Cairns said many years ago in Partington v. Attorney- General [(1869) LR 4 HL 100]: "As I understand the principle of all fiscal legislation it is this : If the person sought to be taxed comes within the .....

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t June, 2002". These become epigraphic words, when seen in contradistinction to other amendments specifically stating those to be clarificatory or retrospectively depicting clear intention of the legislature. It can be seen from the same notes that few other amendments in the Act were made by the same Finance Act specifically making those amendments retrospectively. For example, clause 40 seeks to amend S.92F. Clause iii (a) of S.92F is amended "so as to clarify that the activities men .....

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, it was a conscious decision of the legislature, even when the legislature knew the implication thereof and took note of the reasons which led to the insertion of the proviso that the amendment is to operate prospectively. Learned counsel appearing for the assessees sagaciously contrasted the aforesaid stipulation while effecting amendment in Section 113 of the Act, with various other provisions not only in the same Finance Act but Finance Acts pertaining to other years where the legislature sp .....

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aused undue hardship and for that reason Parliament specifically chose to make the proviso effective from 1.6.2002. 58. The Apex Court in Commissioner of Income Tax-I, Ahmedabad v. Gold Coin Health Food Pvt. Ltd. (2008) 9 SCC 622, in paragraph 6 held that penalty provision were already in existence and penalty was not imposed for the first time. The amendment by the Finance Act as specifically noted in the Notes on Clauses makes the position clear that the amendment was clarificatory in nature a .....

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de the question. The Court has to examine the scheme of the statute prior to the amendment and subsequent to the amendment to determine whether amendment is clarificatory or substantive. The Apex Court in paragraph 20 relied on the decision in Zile Singh v. State of Haryana and others (2004) 8 SCC 1 with approval that it is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective operation. .....

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Martin Lottery Agencies Ltd. (2002) 9 SCC 209, held in paragraphs 36 to 39, 45, 50 to 52 as under :- "36.… The speech of the Hon'ble the Finance Minister would have been relevant for the purpose of opining as to whether the court independently would have arrived at a conclusion that organizing lottery would amount to rendition of service but not otherwise. 37. As it is not possible for us to arrive at the said conclusion, we have no other option but to hold that by inserting the .....

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speech of the Hon'ble Finance Minister in the House of the Parliament may be taken to be a valid tool for interpretation of a statute. It was so held in K.P. Varghese v. Commissioner of Income-tax, Ernakulam and another [(1981) 4 SCC 173 at 184], in the following terms:- "8. … Now it is true that the speeches made by the Members of the Legislature on the floor of the House when a Bill for enacting a statutory provision is being debated are inadmissible for the purpose of interpre .....

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everything which is logically relevant should be admissible. [See also Commissioner of Wealth Tax, Punjab, J & K, Chandigarh, Patiala v. Yuvraj Amrinder Singh and Ors. (1985) 4 SCC 608] 39. It is, however, also well settled that the statute must be interpreted keeping in view the words used in it. We must notice that in Virtual Soft Systems Ltd. v. Commissioner of Income Tax, Delhi-I [(2007) 9 SCC 665], a Bench of this Court has held :- "24. Section 271 of the Act is a penal provision .....

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t noticed that the Act intended to make the position explicit which otherwise was implicit. The Bench went back to the provisions of the Original Act to hold that the clarification issued by the Parliament was in tune with the actual interpretation of the original provision. 50. It is, therefore, evident that by reason of an explanation, a substantive law may also be introduced. If a substantive law is introduced, it will have no retrospective effect. The notice issued to the assessee by the app .....

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before, for the aforementioned purpose, the expressions like for the removal of doubts are not conclusive. The said expressions appear to have been used under assumption that organizing games of chance would be rendition of service. We are herein not concerned as to whether it was constitutionally permissible for the Parliament to do so as we are not called upon to determine the said question but for our purpose, it would be suffice to hold that the explanation is not clarificatory or declarato .....

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ty on electrical energy which can only be levied by a substantive provision of law. The custom duty could be levied only prospectively and not retrospectively. The Central Government realized that custom duty at the rate of 16% was onerous and by Notification No.91 of 2010 Cus. Dated 16.9.2010 reduced the custom duty to 10 paisa per unit. The custom duty was further reduced to 3 paisa per unit by another Notification No.26 of 2012 Cus. Dated 18.4.2012. The learned counsel for the petitioner also .....

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pay duty on the raw material, namely, coal he had paid the duty on raw materials. Since the petitioner had already paid duty on raw materials, namely, coal and consumable under Rule 47(3) of the SEZ Rules, he cannot be subjected to double taxation. We find force in the contention of the petitioner that the petitioner should not be made liable to suffer double taxation, and the petitioner is made to pay the custom duty for the energy supplied then payment on duty of raw materials or any other du .....

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