Encee International NSEZ Vs Commissioner of Customs (CESTAT Allahabad)
Conclusion: Since the issue pertaining to invalid LOA and non-maintenance of record by assessee fell under the jurisdiction of the Development Commissioner, NSEZ/Special Officer and action might be taken against assessee under SEZ Act and SEZ Rules according to law, but invocation of Section 111(o) of the Customs Act absolutely confiscating the seized gold and imposing penalties on assessee under Section 112(a)&(b) and Section 114AA of the Customs Act was not tenable and was liable to be set aside.
Held: In the instant case, Officers of Noida Special Economic Zone Customs visited factory premise of assessee which was a partnership concern. The Officers found that factory was operational. On being demanded, Sujit Kumar Bera produced all the gold available in the factory. Total quantity of gold was found to be 2417 grams. All three workers found present in the factory were unable to produce any documentary evidence in respect of stock of gold and consequently, gold was detained under Section 110 of the Customs Act, 1962. Adjudicating Authority held that assessee did not have valid LOA and the seized gold was transferred to assessee without any valid documents and the Voucher was an after-thought and an attempt to cover up unauthorized possession of seized goods. Adjudicating Authority chose to dismiss the voucher as it was the only voucher issued in the name of assessee. Rest of the vouchers were issued in the name of their sister concerns. Adjudicating Authority passed the impugned order directing absolute confiscation of goods u/s 111 (o) of the Customs Act, 1962. Assessee had challenged the order passed by the Adjudicating Authority before the Tribunal. The issue arose for consideration was whether Customs Officers had jurisdiction to investigate, issue SCN and adjudicate the issues under consideration or it was the authority under the SEZ Act and Rules who were authorised to deal with the matter? It was held that additional evidences were submitted before the Adjudicating Authority and during the cross examinations, both Rajnish Jain and Chakshu Sharma confirmed that the gold was imported and owned by M/s Jayashree Jewellers. Further, M/s Jayashree Jewellers submitted their Stock Register and record of movement of the goods etc. All the details were submitted to the department including import invoice, bill of entry etc evidencing import and ownership of the primary gold, conversion into gold alloy and dispatch to M/s Encee International for job work. Despite these evidences on record, Adjudicating Authority without taking into cognizance, had absolutely confiscated the gold by holding that M/s Encee International had not claimed the ownership of the same. Further, it was found that Rule 47 of the SEZ Rules was a part of Chapter V of the said rules which specified ―conditions subject to which goods might be removed from Special Economic Zone to Domestic Tariff Area. Rule 47 deal with sales in DTA, however, in the present dispute, it was nobody’s case that the disputed goods were removed or being removed or even attempted to be removed from SEZ into DTA without payment of duty, requiring recovery of such duty by issuing the demand etc. Hence, Rule 47 was not applicable in the facts and circumstances of the present case and was not relevant. The matter was pertaining to manufacturing activity by SEZ unit within SEZ unit without valid LOA which fell within the jurisdiction of Development Commissioner, NSEZ and was not a contravention under the Customs Act, 1962 which could be adjudicated by the Commissioner of Customs, Noida for the reasons recorded by the Member (Judicial) in para 16.2 and para 16.3 of the Interim Order. Tribunal allowed the appeal.
