TMI Blog2023 (9) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... date commencement of production Rule 74 (4) SEZ rule, 2006. When the legislature has made a special provision by mentioning a particular export promotion Scheme to be availed only at the time of exit, same cannot be allowed to be freely availed at any time under a provision in which there is no prescription of capital goods to be cleared under EPCG Scheme is available. In this context, we are fortified in interpreting the provision of statute by the trite law that when a method has been laid down, it necessarily prohibits the doing of the act in any other manner than that which has been prescribed, and thus, the prohibition in other provision not being mentioned specifically will not apply. In the present instance, stipulation of one time availment of EPCG Scheme at the time of exit cannot be read as permitting availment of EPCG Scheme under Rule 34 of SEZ Rules, 2006. Particularly under expression on license appearing in that Rule. Further the Export Promotion schemes since 1994 after existence of W.T.O are being made by member countries as compliant to the W.T.O provisions requiring no element of subsidy to be allowed even entering through procedural mechanism. Swit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under provisional assessment as per provisions of SEZ Act/Rules. The department s case was that appellant has not exited from Special Economic Zone and they were not eligible for clearing the capital goods under the prevailing Export Promotion Capital Goods Scheme, as removal of capital goods from SEZ unit under EPCG is only available as per the Rule 74(4) of the SEZ Rules, 2006. Therefore, it is clear that there is no absolute bar on clearance of Capital goods from SEZ to DTA under EPCG, but following the condition that a Unit can opt for EPCG scheme only at the time of exit, as per SEZ Rules 2006 with one time permission from the Development Commissioner. Since the unit had not exited from the SEZ nor any such permission from the Development Commissioner was taken. Therefore, the capital goods cleared is in contravention to the provisions of SEZ Act/Rules and hence liable to re-workout the value as per the provisions of the Section 30 of the Special Economic Zone Act, 2005 read with Rules 30, 34, 47(4) and 49(l) of the SEZ Rules, 2006. While finalizing the assessment of said provisionally assessed Bills if Entry the unit was asked to discharge the duty liabilities accordingly. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Z and that there is a bar on otherwise claiming benefits under the EPCG scheme at the time of clearance of goods into the DTA; as none is specifically mentioned. vii. `Sale of plate bending machine into the DTA is to be considered as an import of capital goods into India; Import of capital goods into India can avail the benefits of EPCG scheme provided at Chapter 5 of the FTP: viii. liability to pay duty upon removal of such goods is on the DTA buyer as the Bill of Entry for Home consumption is to be filed by the buyer of the goods; ix. bond cannot be enforced against the appellant SEZ unit as under the law it is not liable to pay any duty for clearance of goods to the DTA; appellant being seller of goods is not liable to pay duty as it is not the importer on record; it is DTA unit which has procured the EPCG authorization; so DTA unit has to pay duty and interest; x. SEZ authorities erred in issuing SCN to the appellant, the impugned order confirmed the recovery of customs duty after denial of benefit to the DTA buyer under the EPCG authorization; the EPCG authorization issued to the appellant is perfectly valid and neither withdrawn nor cancelled by DGFT, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f India, [2002 (143) E.L.T. 521 (Del.)]; Jain Irrigation Systems Ltd. Vs. Commissioner of Central Excise, Nasik, [2008 (221) E.L.T. 531 (Tri. - Mumbai)]; Premier Rubber Factory Vs. CCE, [1990 (47) E.L.T. 125 (Tribunal)]. A.4. Further, it has been settled by the Hon ble Supreme Court in the case of Government of Kerala Vs. Mother Superior Adoration Convent, [2021 (376) E.L.T. 242 (S.C.)] that beneficial exemptions or policies which have been introduced in order to promote or encourage certain activities should be liberally interpreted. In view of the judgment, it can be inferred that no bar should be read into the beneficial policy in order to restrict the availment of such benefit. Further, in the case of K.R. Steel Union Ltd. Vs. Commissioner of Customs, Kandla [2001 (129) E.L.T. 273 (S.C.)], the Hon ble Supreme Court has held that the language of a beneficial notification (or legislation in the present case) have to be construed keeping in view the said object and purpose of the exemption. Thus, as the SEZ law has been introduced with an aim to boost the country s economy and to encourage exports in order to bring in more foreign investment, in such a case, upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EZ law by the Appellant. DEMAND FOR CUSTOMS DUTY AND INTEREST IS ILLEGAL AND IS LIABLE TO BE SET ASIDE Duty and interest cannot be demanded by the SEZ Unit- Rule 48 (1) of SEZ Rules states that it is the duty of a DTA unit to file Bill of Entry for home consumption of goods being cleared from a SEZ unit. In the present case, SEZ Unit and DTA Unit of the Appellant operate as two separate entities in terms of Rule 22 of SEZ Rules. Further, the impugned goods the BoE was filed by the DTA Unit of the Appellant for clearance of the impugned goods. Hence, the importer on record was the DTA Unit and therefore the duty liability was on the DTA Unit. Thus, in such a case, no demand of duty could be made against the SEZ Unit. Therefore, findings of the Ld. Commissioner (Appeals) at para 10 of the impugned order that the SEZ Unit of the Appellant was liable to pay customs duty as it had entered a bond under Rule 22 to pay all duties on DTA clearances in terms of the SEZ Act, is untenable. 7. Without prejudice, duty and interest cannot be demanded from the DTA Buyer- Section 30 of SEZ Act provides that goods which are cleared from SEZ unit to DTA, shall be inter alia chargeable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DTA buyer has fulfilled its Export Obligation under the EPCG Authorization: Under the EPCG Scheme, capital goods are allowed to be imported at concessional rate of duty. In lieu of the concessional rate of duty, the EPCG Authorization Holder has to fulfil its Export Obligation ( EO ) fixed by the DGFT Authorities. In case where an EPCG Authorization holder fails to fulfil its EO after expiry of EO period, the Customs Authorities can demand differential duty saved and penalty from the Authorization holder. In the present case, it is pertinent to mention that the DTA Unit has fulfilled 100% of EO and received a Redemption Certificate from the jurisdictional DGFT authority on 12.10.2021. Thus, as the DTA buyer has fulfilled the EO in lieu of concessional duty during import, no differential duty can be demanded from the DTA Buyer. MISCELLANEOUS SUBMISSIONS: 10. The impugned order is a non-speaking order The impugned order does not provide any reasoning against various submissions made by the Appellant and is violative of principles of natural justice and thus the same is liable to be set aside. Customs authorities cannot sit in judgment over the decision of DGFT to gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive net foreign exchange earning, by a Unit, such entrepreneur shall be liable for penal action under the provisions of Foreign Trade (Development and Regulation) Act, 1992 and the rules made there under. Rule 34 of the SEZ Rules, 2006 (Utilization of goods)- The goods admitted into a Special Economic Zone shall be used by the Unit or the Developer only for carrying out the authorized operations but if the goods admitted are utilized for purposes other than for the authorized operations or if the Unit or Developer fails to account for the goods as provided under these rules, duty shall be chargeable on such goods as if these goods have been cleared for home consumption: Provided that in case a Unit is unable to utilize the goods imported or procured from Domestic Tariff Area, it may export the goods or sell the same to other Unit or to an Export Oriented Unit or Election Hardware Technology Park Unit or Software Technology Park Unit or Bio-technology Park Une without payment of duty, or dispose off the same in the Domestic Tariff Area on payment of applicable duties on the basis of an import licence submitted by the Domestic Tariff Area buyer, wherever applicable Rule 47(4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme only at the time of Exit, as per SEZ Rules, 2006 with one time permission from the Development Commissioner. Since the Unit had not exited from the SEZ nor any such permission from the Development Commissioner was taken therefore, the capital goods cleared are in contravention of the provisions of the SEZ Act/Rules and hence liable to re-workout the value as per provisions of Section 30 of SEZ Act, 2005 read with Rules 30, 34, 47 (4) and 49 (1) of SEZ Rules, 2006. 13. The D.R. also argued that Commissioner (Appeals) rightly rejected that bond can be enforced against the appellant if goods including capital goods are cleared for any purpose other than for which they were obtained till the time SEZ has not exited from Special Economic Zone, so they were not eligible for clearing the capital goods under the prevailing Export Promotion Capital Goods Scheme, as removal of capital goods from SEZ unit under EPCG is only available under Rule 74(4) of the SEZ Rules-2006. Learned Commissioner (Appeals) also found that the appellant had submitted a bond- cum- undertaking under Rule 22 of the SEZ. Rules- 2006 and have undertaken to fulfill the conditions of the bond-cum-undertaking and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omotion Capital Goods Scheme. That there is no bar on clearance of Capital goods from SEZ to DTA under EPCG, but following the condition that a unit can opt from the Development Commissioner. Since the Unit had not exited from the SEZ nor any such permission from the Development Commissioner was taken, therefore, the capital goods cleared are in contravention to the provisions of the SEZ Act/Rules and hence, liable to re- workout the value as per provisions of Section 30 of SEZ Act, 2005 read with Rules 30, 34, 47 (4) and 49 (1) of SEZ Rules, 2006. 15. Considered the rival submissions. In this context, it needs to be appreciated that under the provisions in which SEZ Scheme operates, under Section 30 of the SEZ Act, 2005, terms of removal of goods from SEZ to DTA on payment of Customs duties on the rate of duty and tariff valuation on the date of removal has been provided. Further, under Rules made to carry out the provisions of SEZ Act, 2005 i.e. S.E.Z Rules, 2006, under Rule 34 there is a prescription available that goods admitted in SEZ shall be used only for approved operations i.e. which is permitted through LOP by the Unit Approval Committee under Rule 49(1) of the SEZ Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court, the most well- known being, perhaps, State of Uttar Pradesh v. Singhara Singh [AIR 1064 SC 358], conclude the issue, in law, in favour of the department. The legal principle, fossilised over a period of time, is thus enunciated, in Singhara Singh [AIR 1964 SC 358] 8. In Nazir Ahmed's case [AIR 1936 PC 523] the Judicial Committee observed that the principle applied in Taylor v. Taylor [(1875) 1 ChD 426) a Court, namely, that where a power is given to do a certain thing in a certain way, the thing must be done in that or nor at all and that other methods of performance are necessarily forbidden, applied to judicial officers making records under s. 164 and, therefore, held that magistrate could not give oral evidence of the confession made to him which he had purported to record under s. 164 of the Code. It was said that otherwise all the precautions and safe guards laid down in Sections 164 and 364, both which had to be read together, would become of such trifling value as to be almost idle and that it would be an unnatural construction to hold that any other procedure was permitted than which is laid down with such minute particulanty in the section themselves. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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