TMI Blog2019 (6) TMI 1546X X X X Extracts X X X X X X X X Extracts X X X X ..... itioners to the period from 26-6-2009 to 15-9-2010 for the reason that while holding in favour of the petitioners the Division Bench (in paragraph 23 of the judgment) was of the view that the provisions of Rule 47(3) of the SEZ Rules are designed to align 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 material and consumables used to generate electricity so also MPP located within SEZ imports or procures capital goods without payment of duty on raw materials and consumables to the extent the electricity generated by it is removed/supplied/sold outside SEZ. With effect from 6-9-2010, the petitioners were no longer liable to pay duty on raw materials and inputs. Therefore, if the petitioners do not pay the duty to the extent specified in the Notification No. 91/2010, dated 6-9-2010 and subsequent notifications, the petitioners would be enjoying double benefits of not paying duty on raw materials and inputs and also not paying any customs duty on removal of electricity from the SEZ to DTA. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said aspect. 2. On request of the Learned Advocates for the parties, the matter was, therefore, adjourned whereafter, the Learned Advocates were heard. Thereafter, on account of the fact that the Court was hearing riots related criminal appeals, it was not possible to proceed further with the dictation, under the circumstances, stand over to 5th June, 2017 for dictation of judgment. 2. Thereafter, on account of change in the roster and for one reason or the other, the matter could not be posted for dictation of the judgment. At the relevant time, the submissions of the Learned Counsel for the respective parties had already been recorded and it was only the further arguments which were yet to be recorded. A considerable time has passed since the matter was heard, but since the Learned Counsel for the respective parties have stated that they have no objection if the Court proceeds to dictate the judgment, the Court has proceeded to dictate the judgment afresh. 3. By this petition under Article 226 of the Constitution of India, the petitioners seek the following substantive reliefs : 9. The petitioners, therefore, pray that : [A] YOUR LORDSHIPS may be pleased to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s may be pleased to issue a writ of mandamus or any other writ in the nature of mandamus directing the appropriate authority to refund the amount collected on account of duty on electricity removed from SEZ to DTA in view of the judgment dated 15-7-2015 of this Hon ble Court in petitioner s own case i.e. Special Civil Application No. 3142 of 2010; [D] Your Lordships may be pleased to issue a writ of certiorari or a writ in the nature of certiorari or any other order or direction calling for the records of the case and after going into legality and propriety thereof, quash and set aside the letter dated 8-10-2015 (Annexure-A) and letter dated 16-11-2015 (Annexure-J) hereto. 4. The petitioner No. 1, a company is incorporated under the provisions of the Companies Act, 1956 and is, inter alia, engaged in the business of generating, transmitting and selling electrical power. The company has set up a Thermal Power Plant, at Mundra within the Special Economic Zone (hereinafter referred to as the SEZ ), which is the subject matter of the present petition. Mundra Special Economic Zone has been set up as Mundra Port and Special Economic Zone Ltd. (hereinafter referred to as the MPSE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-processing areas of Special Economic Zones. 4.4 On 27-2-2010, the petitioner company received a letter dated 26-2-2010 from the fourth respondent - Specified Officer, in charge of Mundra Special Economic Zone, Mundra, requesting it to start payment of duty immediately with retrospective effect from 26th June, 2009. Being aggrieved, the petitioners approached this Court by way of a writ petition being Special Civil Application No. 3142 of 2010 [2015 (330) E.L.T. 883 (Guj.)] challenging the validity of Notification No. 25/2010-Cus., dated 27-2-2010 as well as Notification No. 21/2002-Cus., dated 1-3-2002 (Serial No. 573 of the Table) as amended by clause 60 of the Finance Bill read with Notification No. 25/2010-Cus., dated 27-2-2010. 4.5 During the pendency of the said writ petition, the Central Government issued Notification No. 91/2010-Cus., dated 6-9-2010, whereby the entry at Serial No. 573 in the Table to Notification No. 21/2002-Cus., dated 1-3-2002 came to be substituted prescribing a particular rate of Customs duty (i.e. ₹ 100/- per 1000 kwh) for electricity removed from SEZ to DTA or non-processing areas of SEZ. The petitioners, therefore, moved a civil applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urth respondent, by a letter dated 8-10-2015 addressed to the petitioner company stated that the petitioner company was entitled to exemption from payment of Customs duty for the period from 26-6-2009 to 15-9-2010 and that, it was required to make payment of duty at the rate prescribed under Notification No. 21/2002-Cus., dated 1-3-2002 as amended by Notification No. 91/2010-Cus., dated 6-9-2010 and Notification No. 26/2012-Cus., dated 18-4-2012 amending Entry No. 145 of Notification No. 12/2012-Cus., dated 17-3-2012. The petitioner company was also directed to make payment of Customs duty. 4.13 The petitioner-company, thereafter, addressed another letter dated 29-10-2015 to the fourth respondent explaining the legal position and contending that it was not liable to pay Customs duty and would initiate action for refund of Customs duty paid during the past period. 4.14 Vide letter dated 16-11-2015, the fourth respondent expressed his disagreement with the contents of the letter dated 29-10-2015 addressed by the petitioner company and requested for the details mentioned therein. In the meantime, the petitioner company had applied for consequential refund on 9-12-2015, but in vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leviable as used in Section 30(a) of the SEZ Act, is to be interpreted not in context of the word levy , which means chargeability, but in context of the word payable so as to create a level playing field. Reliance was placed upon the decision of this Court in the case of Roxul Rockwool Insulation India Pvt. Ltd. v. Union of India, 2015 (320) E.L.T. 554 (Guj.), wherein this Court while dealing with Section 3(1) of the Customs Tariff Act, 1975 wherein the Court in the context of a similar expression, namely, be liable to a duty equal to excise duty for the time being leviable on a like article if produced or manufactured in India , has observed thus : 18. If, therefore, by virtue of an exemption notification, the whole of the excise duty payable as prescribed in the Central Excise Tariff Act is exempt for the local manufacturers, no CVD would be payable under Section 3(1) of the Customs Tariff Act on import of such goods. However, the central concept remains the same, namely, the importer would have to pay CVD equivalent of excise duty payable on a like article if produced or manufactured in India. In the present case, by virtue of the exemption notifications on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chargeability, but in the context of the word payable and that while interpreting the similarly worded Section 30(a) of the SEZ Act, the aforesaid decisions would apply on all fours. 5.4 It was submitted that while interpreting the provisions of Section 30(a) of the SEZ Act, this Court in the case of the petitioner company itself in Special Civil Application No. 3142 of 2010 rendered on 15-7-2015, took a view that when no Customs duty is payable on the goods imported in India, no duty will be payable on similar goods transferred from SEZ to DTA in view of Section 30 read with Section 51 of the SEZ Act, and was further pleased to hold that the Notification No. 25/2010-Cus., dated 27-2-2010 as well as the Notification No. 21/2002-Cus. as amended by clause-60 of the Finance Bill, 2010 (Second Schedule thereto) are ultra vires Entry 83 of List-1 of Seventh Schedule of the Constitution of India, Section 62 of the Customs Act, 1962 and Section 30 of the SEZ Act, 2005 as well as Articles 14 and 265 of the Constitution of India and consequently, deserve to be quashed and set aside. 5.5 It was submitted that once the initial action of levying Customs duty on removal of electricity f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing payment of customs duty on the domestic clearance of electricity deserves to be quashed and set aside. It was pointed out that insofar as the units engaged in generating electricity in DTA are concerned, they are not at all liable to pay excise duty under the Central Excise Act, 1944, inasmuch as, electricity has been held to be non-excisable goods since against the Excise Tariff Heading No. 2716 00 00, no duty is indicated. It was submitted that thus, such domestic units would be even otherwise at an advantageous position as compared to SEZ units in the event of there being any liability on the part of the SEZ unit to pay customs duty on removal of electricity from SEZ to DTA. 5.7 It was submitted that one of the main objectives of the Government of India behind the enactment of the SEZ Act, 2005 is to make available goods and services free of tax and duties supported by integrated infrastructure for export production, expeditious and single window approval mechanism and a package of incentives to attract foreign and domestic investments for promoting export-led growth. It was submitted that in order to place the SEZ Act at a higher pedestal as compared to the Customs Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 12 of the said Act and attract levy of export duty, to be paid at the time of exportation of such goods. Export under the Customs Act, 1962, therefore, can be said to have taken place only upon movement of the goods outside the territorial waters of India. Reference is made to the decision of the Apex Court in the case of Union of India v. Rajindra Dyeing and Printing Mills Limited, (2004) 10 SCC 187. 41.1.3 In the absence of any amendment of the definitions of the terms Export and India in the Customs Act, 1962, or any amendment in the charging section i.e. Section 12 or insertion of a charging provision contemplating movement of goods from the Domestic Tariff Area to the Special Economic Zone as a taxable event entailing a levy of Export Duty as in the case of export, the levy of Export Duty cannot be justified under the provisions of the Customs Act, 1962. 5.9 It was submitted that once the removal of goods from SEZ to DTA, does not attract the customs duty under the provisions of the Customs Act, then in that case, there arises no question of granting or not granting exemption under the provisions of Section 25 of the Customs Act, which empowers the Central Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this Court in the case of the assessee itself. It was emphatically argued that the earlier decision has to be followed with full vigour and that in view of the decision, the notifications are non est and the petitioners are not liable to pay any duty as there is no payability on import of electricity. 5.11 The Learned Counsel submitted that Section 30 of the SEZ Act is the charging section, which provides for levy of duty on removal of goods from SEZ to DTA. It was submitted that the measure of levy under Section 30 of the SEZ Act is by reference to Customs duty levied on such or like goods when imported into India under the Customs Act read with Customs Tariff Act, 1975. It was submitted that the SEZ Act is not covered under Entry 83 of List-1 of Schedule VII of the Constitution of India, as it does not provide for levy of Customs duty on goods imported into India. It is only the Customs Act which is covered by Entry 83 of List-1 of Schedule VII of the Constitution of India and has a separate provision in relation to levy of duty on goods which are imported from a place outside India to SEZ and such imports are defined in Section 2(o) of the SEZ Act, which are exempt by virtu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court does not restrict the levy of Customs duty for the further period. It was pointed out that the parent notification was amended from time to time whereby the Customs duty was reduced from 16% to 10 paisa per unit and was further reduced to 3 paisa per unit till 15-2-2016, whereafter the exemption was made conditional subject to certain conditions. 6.2 Next, it was submitted that if the petitioners contention were to be accepted, viz., that no duties of customs are leviable on the removal of electricity from the SEZ to DTA, it would result into granting double benefit to the petitioners. The attention of the Court was invited to Instruction 67, dated 28th October, 2010 issued by the Government of India, Ministry of Commerce and Industry (SEZ Section) to all Development Commissioners, to point out that in order to implement the Customs Notification No. 91/2010, dated 6-9-2010, it had been decided that the operation of Rule 47(3) of the SEZ Rules, 2006 is kept in abeyance with effect from 6-9-2010 till further order. The attention of the Court was also invited to the communication dated 4-9-2015 of the petitioner addressed to the Specified Officer providing details rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me day, viz., 27-2-2010, one bifurcating the entry and the other providing that goods falling under Tariff Item 2716 00 00 when imported into India shall be exempted from the whole of the duty specified in the said First Schedule whereas the proviso thereto provided that nothing contained in that notification shall apply to electric energy falling under Tariff Item 2716 00 00 removed from a Special Economic Zone to the Domestic Tariff Area or non-processing areas of Special Economic Zones. 6.4 It was contended that from the observations in paragraph 61 of the judgment of the Division Bench, it is evident that the same would not govern anything beyond 15-9-2010. According to the Learned Advocate, the Court found favour only qua a part of the reliefs prayed for and not in the remaining part and hence, the petitioners cannot now question the decision. Referring to the statement of benefit availed by the petitioners dated 4-9-2015, it was submitted that the resultant effect of the relief granted would amount to grant of double benefit to the petitioner. It was submitted that the petitioners having claimed certain reliefs before this Court and this Court having not granted the same, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a Special Economic Zone Developer s Power Plant in the SEZ or Unit s captive power plant or diesel generating set may be transferred to Domestic Tariff Area on payment of duty on consumables and raw materials used for generation of power subject to the conditions stipulated thereunder, has been been kept in abeyance for a period of five years and the petitioners have enjoyed the benefit thereof. Therefore, the petitioners cannot claim double benefit, viz., due to Rule 47(3) of the SEZ Rules, having been kept in abeyance as well as exemption from payment of Customs duty. 7.3 It was, accordingly, urged that the petitioners are not entitled to the reliefs prayed for in the petition and that the petition deserves to be dismissed. 8. In rejoinder, Mr. Kamal Trivedi, Learned Counsel for the petitioners invited the attention of the Court to Rule 22 of the SEZ Rules, to submit that the terms and conditions for availing exemptions are provided thereunder and that the provisions of the Customs Act will not apply. Reference was made to paragraph 48 of the previous judgment of this Court, to point out that the Court has held that in order to give impetus to exports, the SEZ Act has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng or sub-heading may be referred to as an aid in construing the provision but even in such a case it could not be used for cutting down the wide application of the clear words used in the provision. Sub-item (3) so construed is wide in its application and all parts of refrigerating and air-conditioning appliances and machines whether they are covered or not covered under sub-items (1) and (2) would be clearly covered under that sub-item. Therefore, whether the manufacturer supplied the refrigerating or air- conditioning appliances as a complete unit or not is not relevant for the levy of duty on the parts specified in sub-item (3) of Item 29A. 8.2 It was submitted that the previous judgment of this Court proceeds mainly on the principle that if no duty is liable to be paid on import to DTA, there is no duty liability. It was submitted that if a particular principle is enunciated by the Court as regards payment of duty on transfer of goods from SEZ to DTA, the same will apply regardless of the period so long as there is no change in the provision. It was submitted that the principle holds the field for the any period. 8.3 In support of such submission, the Learned Counsel pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty and tax concession to the developer or co-developer as provided in sections 26 and 27 of the Special Economic Zones Act, 2005, it was submitted that the same does not apply to the petitioners and that the same applies to residential complexes, hotels, hospitals, schools, etc. It was submitted that insofar as the provisions of Section 49 of the SEZ Act are concerned, to their knowledge, there is no notification, nor has such notification brought on record. It was submitted that the principle laid down by this Court in the earlier decision will apply to all notifications and in a taxation matter, what has to be seen is the liability. 9. From the facts and contentions noted hereinabove, it is an admitted position that the petitioners had earlier filed a writ petition being Special Civil Application No. 3142 of 2010, seeking the following reliefs : 13. The Petitioners, therefore, pray that :- [A] YOUR LORDSHIPS may be pleased to declare that the impugned Notification i.e. Notification No. 25/2010-Cus., dated 27th February, 2010. Annexure A hereto, is unconstitutional and ultra vires Entry 83 of List 1 of Schedule VII of the Constitution of India and/or Section 12 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s amended by Clause 60 of the Finance Bill, 2010 (Second Schedule thereto) are ultra vires Entry 83 of 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. 11. Thus, though the petitioners had challenged the Notification No. 25/2010-Cus., dated 27-2-2010 and Notification No. 21/2002, dated 1-3-2002 as amended by clause 60 of the Finance Bill, 2010, Notification No. 91/2010-Cus., dated 6-9-2010, the Court had granted limited relief to the extent that it had set aside the proviso to Notification No. 25/2010-Cus., dated 27-2-2010, which provided that the notification exempting goods falling under Tariff Item 2716 00 00 from the whole of the duty of Customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 would not apply to electrical energy falling under Tariff Item 2716 00 00 removed from SEZ to DTA or non-processing areas of SEZs. 12. It may be noted that the above notification stood rescinded by a notification dated 10th May, 2010 except as respects thing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 63, 5th line reads as under : 61 .... The petitioner is entitled for exemption from payment of customs duty for the period 26-7-2009 to 15-9-2010. The petitioner is entitled for exemption from payment of Customs duty for the period 26-7-2009 onwards, so long as no Customs duty is payable on similar goods imported in India. 3. In para 63 (ultimate para), 5th line reads as under : .... The petitioners are entitled for exemption from payment of customs duty for the period 26-6-2009 to 15-9-2010 on the electricity cleared to DTA from SEZ. .... The petitioners are entitled for exemption from payment of customs duty for the period 26-6-2009 onwards on the electricity cleared to DTA from SEZ, so long as no customs duty is payable on similar goods imported in India. 61 16. The Division Bench, after hearing the Learned Counsel for the respective parties, passed the following order on the Note for Speaking to the Minutes : Heard Mr. Kamal B. Trivedi, Learned Senior Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Bench (in paragraph 37 of the judgment) has further expressed the view that the impugned notification amounts to double taxation inasmuch as the petitioners continue to be liable for payment of duty on raw materials and consumables, coal etc., under Rule 47(3) of the rules and shall now be required to pay further customs duty @ 16% on electrical energy removed from SEZ and a totally new and additional liability in respect of electricity removed into non-processing areas of SEZ although there is no liability to do so under the SEZ Act and the SEZ Rules. Again in paragraph 62 of the judgment the Division Bench has observed that the case of the petitioner is that the levy of customs duty for the power supplied to DTA from SEZ amounts to double taxation as the petitioner was liable to 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 consumables under Rule 47(3) of the SEZ Rules, he cannot be subjected to double taxation. The Division Bench found force in the contention that the petitioner should not be made liable to suffer double taxation, and if the petitioner is made to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the reliefs prayed for in the petition, the petitioners have sought a declaration that there is no liability on part of the petitioners to make payment of customs duty at the rates prescribed under (i) Notification No. 21/2002-Cus., dated 1-3-2012, (ii) Notification No. 91/2001-Cus., dated 6-9-2010, (iii) Notification No. 12/2012-Cus., dated 17-3-2012, and (iv) Notification No. 26/2012-Cus., dated 18-4-2012 in view of the law laid down by this Court in the judgment dated 15-7-2015 delivered in the case of the petitioner company itself being Special Civil Application No. 3142 of 2010 and ancillary reliefs. 22. In this regard it may be noted that insofar as Notification No. 21/2002, dated 1-3-2002 as amended by clause 60 of Finance Bill, 2010 and Notification No. 91/2010-Cus., dated 6-9-2010 are concerned, the same were subject matter of challenge in the above writ petition, but the Division Bench did not deem it fit to grant any relief in respect of those notifications. Therefore, the question of giving a declaration qua those notifications based upon the findings recorded in the said judgment does not arise. Insofar as Notification No. 12/2012-Cus. and Notification No. 26/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. In this notification, there is no general exemption in respect of goods falling under Tariff Item 2716 00 00 of the First Schedule to the Customs Tariff Act, 1975 when imported into India from the whole of the duty of customs leviable thereon which is specified in the said First Schedule. Under this notification, different rates are provided for goods falling under Tariff Item 2716 00 00 and it is only in respect of electrical energy originating from Nepal and Bhutan that the standard rate (paisa per KWh) is nil. Thus, it is not as if import of electrical energy per se has been exempted from the whole of the customs duty leviable thereon. This notification is country specific and the petitioners cannot claim the benefit of exemption granted to import from those countries. The above referred decision rendered in Special Civil Application No. 3142 of 2010 would have no applicability whatsoever to Notification No. 9/2016-Cus., dated 16-2-2016 as the same was rendered in the context of a notification wherein import of all goods falling under Tariff Item 2716 00 00 was exempted from payment of the whole of the customs duty leviable thereon. 25. In view of what is held hereinabove, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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