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TMI Blog2023 (1) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... ders dated 27.03.2015, 07.09.2018 and 19.06.2020 made by the competent authorities under The Special Economic Zones Act, 2005 (for short, SEZ Act) and the prayer for a direction to the Revenue to implement the order of the CESTAT dated 17.02.2022 in Final Order No.2005720065/2022 insofar as the findings related to 4 Kgs of gold seized from the Airport. We refer to the parties as 'Revenue' for the orders made under the Customs Act, 1962 (for short, Act 1962); 'competent authority/SEZ' for the orders made under SEZ Act and M/s. Ashwin Gold Pvt Ltd/AGPL as 'importer'. 3. The circumstances preceding to initiation of the steps under Act 1962 or under SEZ Act are similar, therefore, are stated hereunder: 3.1 AGPL/importer has established an export unit vide order dated 04.10.2011 read with 26.02.2012 in Special Economic Zone Cochin (CSEZ). The unit is established to make gold ornaments and jewellery for export from CSEZ. On 11.02.2013, the importer applied to the Specified Officer of Customs, Cochin Special Economic Zone, Kakkanad, Cochin, for taking out gold imported for job work in a Domestic Tariff Area (for short, DTA). On 14.03.2013, the Office of Development Commissioner of SEZ a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom M/s Kallarackal Jewellers, Angamaly, being made of 10 Kgs. of gold bars of 995 purity, smuggled out from M/s. Ashwin Gold (P) Ltd: should not be confiscated under the provisions of Section 11 (b), (j), (k) and (o) of the Customs Act, 1962. iii. 6499.030 gms. of gold articles seized from M/s Smijo Gold. Trichur on 12-08-2014 being made of 6.5 Kg of gold smuggled out from M/s. Ashwin Gold (P) Ltd.. CSEZ on 08-08-2014, should not be confiscated under the provisions of Section 111(b), (j), (k) and (o) of the Customs Act, 1962. iv. 4346.890 gms. of gold articles seized from M/s. Southern Gold Pvt Ltd., Trichur on 12-08-2014 and made out of 4 Kgs of gold smuggled out from M/s. Ashwin Gold (P) Ltd.. CSEZ on 08.08.2014 should not be confiscated under the provisions of Section 111(b), (j), (k) and (o) of the Customs Act, 1962. v. the 4581.581 gms. of gold articles seized from M/s Ajay & Co Trichur should not be confiscated under the provisions of Section 111(b), (j), ( k) and (o) of the Customs Act, 1962. vi. the 1075.317 gms. of gold articles seized from M/s. Leo's Angel Gold, Trichur should not be confiscated under the provisions of Section 111(b), (j), (k) and (o) of the Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Section of the Customs Act, 1962. 72. M/s. Southern Gold Pvt. Ltd.. Trichur represented by its Director Shri C.A. Collins, were called upon to show cause as to why:- (i) the 4346.89 grams of gold seized from M/s. Southern Gold Pvt. Ltd., Trichur should not be confiscated under the provisions of Section 111(b), (j), ( k) and (o) of the Customs Act, 1962; and (ii) penalty should not be imposed on them under the provisions of Section 112 (b) of the Customs Act, 1962. 73. Shri. M.K. Babu, Prop. M/s. Smijo Gold. Trichur was called upon to Show cause as to why- i. the 6499.03 grams of gold seized from M/s. Smijo Gold. Trichur should not be confiscated under the provisions of Section 111(b), (j), (k) and (o) of the Customs Act. 1962 and ii. penalty should not be imposed on them under the provisions of Section 112 (b) of the Customs Act, 1962. 74. M/s. Ajay & Co.. Trichur was called upon to Show cause as to why :- i. the 4581.581 grams of gold articles seized from M/s Ajay & Co Trichur should not be confiscated under the provisions of Section 111(b), (j), (k) and (o) of the Customs Act. 1962; ii. penalty should not be imposed on them under the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l release in respect of the balance quantity shall be exercised within 30 days of receipt of this order. In the event of failure to comply with the terms as above, the Bank Guarantee executed shall stand adjusted there against. ii. I order confiscation of the 6499.030 gms. of gold articles valued at Rs. 1,75,73,377/- seized from M/s. Smijo Gold, Trichur under the provisions of Section 111(o) of the Customs Act, 1962. However I extend an option to redeem the said gold articles on payment of a redemption fine of Rs. 6,50,000/- (Rupees Six lakhs Fifty thousand only) under Section 125 of the Customs Act, 1962. Appropriate duty, interest and other charges as applicable shall also be payable. The option of redemption shall be exercised within 30 days of receipt of this order. iii. I order confiscation of the 4346.89 gms. of gold articles valued at Rs.1,17,53,990/- seized from M/s. Southern Gold P. Ltd Trichur under the provisions of Section 111(o) of the Customs Act. 1962. However, I extend an option to redeem the said gold articles on payment of a redemption fine of Rs. 4,00,000/ (Rupees Four Lakhs only) under Section 125 of the Customs Act, 1962. Appropriate duty, interest and othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd.. under the provisions of Section 112(a) The Customs Act, 1962. This penalty shall relate to the gold improperly removed from SEZ to DTA but since recovered and to the 1Kg gold under seizure at Air Cargo Complex, Nedumbassery which is confiscated vide (vi) above. ix. I impose a penalty of Rs. 10,00,000/- (Rupees Ten lakhs only) on Shri. K.O. Anto, Prop. Kallarakkal Jewellery, Angamaly under the provisions of Section 112(b) of the Customs Act, 1962. x. I impose a penalty of Rs. 1,00,000/- (Rupees One lakh only) on M/s. Joyalukkas under the provisions of Section 112(b) of the Customs Act, 1962. xi. I impose a penalty of Rs. 1,00,000/- (Rupees One lakh only), on Shri. Jeeson Davis under the provisions of Section 112(b) of the Customs Act, 1962. xii. I impose a penalty of Rs. 1,00,000/- (Rupees One lakh only) on Shri. B. Jayakumar under the provisions of Section 112(b) of the Customs Act, 1962. xiii. I impose a penalty of Rs. 1,00,000/- (Rupees One lakhs only) on Shri. T.R. Saji, under the provisions of Section 112(b) of the Customs Act, 1962 xiv. I impose a penalty of Rs. 50,000/- (Rupees Fifty thousand only) on Shri. Venugopalan under the provisions of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the required formalities and without payment of appropriate amount of Custom duty and accordingly requested permission to visit the premises and conduct necessary verification in the presence of Officers and Shri Sanjay Subrao Nikam, Managing Director of the Company. On completion of the verification at the CSEZ premises of M/s Ashwin Gold Pvt. Ltd. at Plot No. 16-A(SDF), Ground Floor, CSEZ, The Commissioner of Customs (Preventive) vide letter dated 128-2014 informed that their verification has revealed that 10.5 KG of gold imported: them was nu, available in the premises. Further investigation led to recovery of the said gold from the premises of two jewellery old workers at Thrissur. A further recovery of gold earlier smuggled out was recovered from the premises of a Jewellery in Angamally. 5.1 The importer, through the reply dated 27.10.2014, explained its stand on the charges against the importer. The Development Commissioner, vide Order-in-Original dated 27.03.2015, directed or held as follows: "M/s Ashwin Gold Private Ltd has caused loss of foreign exchange by way of import of Cold Bullion and non-realization of subsequent export proceeds in respect of exports made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT directing the release of 4 Kg of gold. 6. Mr Sreelal Warrier, persuasively, but with considerable force, challenges the reasoning and conclusion recorded by the CESTAT in the order dated 17.02.2022 as illegal and unavailable in the case circumstances. By referring to the places of search, seizure, or recovery of gold, as stated in paragraph 4, it is argued that the CESTAT committed a serious error in law in expanding the jurisdiction of CSEZ beyond the notified area and thus has debilitated the power and function and duty of the Officers under Act 1962. There is no quarrel on the scope of SEZ Act and the privileges enjoyed by a unit located in CSEZ. The jurisdiction is not to be appreciated on the mere application of provisions of SEZ Act. But the jurisdiction is appreciated and applied to on the appreciation of jurisdictional facts and the relevant provision of law. Reproducing his argument, namely, the CESTAT in its appellate jurisdiction examined the provisions of the SEZ Act and the overriding effect of a few provisions of the said law and declared that the Officers of the Customs Department are without jurisdiction in respect of offences noticed by them in DTA, the exclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer or agency to be the enforcement officer or agency in respect of any notified offence or offences committed in a Special Economic Zone. The argument is that Section 21 refers to and deals explicitly with a notified offence or an offence committed in an SEZ. In the case on hand, the offence is under the Customs Act and not detected in the SEZ or limited to the bounds of SEZ. Explained, he argues that the inspection by the Officers of the Customs Department of the unit of the importer in SEZ on 11.08.2014 is to verify whether the removal of gold from CSEZ into DTA is preceded by permission or not. On the day of the inspection and search, it was clear that the movement of imported gold from CSEZ into DTA is unauthorized. The place where the gold is seized, since is in DTA, the Customs Officers have power and jurisdiction to levy duty; penalty and to order confiscation of smuggled gold into the Country. Paragraph 8.1 of the order under appeal is distinguishable to the case on hand if established by the Department as a serious omission under Act 1962, amounting to smuggling gold into the DTA or Indian territory. The smuggled gold is dealt with as per Act 1962. The Officers of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed offence or offence occasioning in an SEZ. The circumstances stated in the show cause notice are accepted as true and correct; it cannot be said that the subject violations happened in SEZ and were terminated in SEZ. Therefore, only the authorities under the SEZ Act have jurisdiction to act against the importer. In a situation as the present, this Court is of the view that for alleged unauthorized movement of goods/gold, the Development Commissioner etc., would have jurisdiction on the establishment and continuance of a unit in an SEZ and for importing goods/gold into DTA without paying customs duty, the Customs Department have jurisdiction on the information gathered in a DTA in the search carried by them. The CESTAT reasons that when two interpretations are possible, the interpretation favourable to a taxpayer must be accepted is entirely out of context. Jurisdiction, in fact, or law, irrespective of the nature of the enactment, has different manifestations. The CESTAT ought to have noticed the subtility of the area of operation in appreciating the competence or jurisdiction of Officers of the Customs Department on the one hand and the Development Commissioner on the other. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from there. In this circumstance, the import of 4 Kg of gold by M/s. Ashwin Gold can not be considered as a bonafide import for use by unit within CSEZ but acquires the character of a transaction where gold was attempted to be imported for removing it clandestinely to DTA without payment of Customs duty thus making it liable for confiscation under Section 111 (d) and (o) of Customs Act, 1962." 9.1 The CESTAT, in paragraphs 6 and 7 of the order under appeal, had considered whether the 4 Kg gold bar imported by AGPL/importer lying in an uncleared area at Air Cargo Complex Nedumbaserry could be subjected to confiscation or payment of duty and penalty under Act 1962. On analysis of circumstances admitted by the Revenue and the importer, the CESTAT notices that it is not the case of Revenue that as on the date of said import, AGPL/importer did not have license or authorization to import 4 Kg gold. On 19.08.2014, the letter of approval dated 04.10.2011 for setting up a unit in CSEZ was suspended till the finalisation of the case. On 27.03.2015, the authorisation was cancelled. The 4 Kg of gold imported before 19.08.2014 was still in the custody and jurisdiction at the Air Cargo Complex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nversely, an investigation into commissions or omissions in an SEZ. The circumstance is that 4 Kg of gold was imported by the AGPL/importer when it had authorization and permission. The imported gold was lying in an uncleared area at the Air Cargo Complex at Nedumbassery, Cochin Airport. Stock, goods or gold lying in an uncleared area cannot be confiscated on the ground that upon completion of import, the said goods could also be used for a purpose otherwise provided for by law. Succinctly put, the Order-in-Original, in anticipation of the 4 Kg of gold being misused or moved out of CSEZ, has been confiscated. We consider that the reasoning of the CESTAT, insofar as 4 kg gold is concerned, is contextual, correct and tenable. Hence, to this limited extent, the said finding does not warrant our interference. W.P.(C) No.27835/2021 11. We have heard Mr P A Augustine and Ms Krishna for the parties. 12. Mr Augustine argues that the importer has been operating its activities in the unit established in CSEZ strictly in compliance with the requirement of law and Rules. To illustrate, he invites our attention to Ext.P4 dated 11.02.2013 of the importer requesting permission to move gold imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to and, for the first time, brought before this Court or before the appellate authority. 15. The ground that the appellate authority did not afford a fair and complete opportunity to the importer is no reason to find fault with the detailed conclusions arrived at by the Development Commissioner. Since the prayer in the instant writ petition can be treated as one of certiorari, it is commended for our consideration after looking at the record to determine whether the order of appellate authority is justifiable from the record. If not, the record suggests that the matter needs to be re-examined by the appellate authority; the order of the appellate authority alone can be set aside and remitted to the appellate authority. 16. We have noted both the contentions Mr Augustine urged. We are of the view that the objection raised by Adv Krishna on the timing of documents now introduced, in the absence of a reply at the first instance, whether the documents now produced could be relied upon etc., to upset the findings of the Development Commissioner are matters to be considered by the appellate authority. The issue has a substantial consequence on both sides. The denial of opportunity cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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