Case Law Details
DLF Utilities Ltd. Vs Union of India (Madras High Court)
Conclusion: Even if, it was assumed that the clearance of HSD Oil was without the authority of law by the DTA supplier (IOCL). Only the jurisdictional officer concerned under the Central Excise Act, 1944 within whose jurisdiction IOCL was registered, was competent to issue a show cause notice to recover the excise duty under section 11A of the Central Excise Act, 1944. Therefore, the demand proposed for recovering excise duty on HSD Oil was liable to be quashed.
Development Commissioner appointed under section 11 of the Special Economic Zones Act, 2005 is neither a “proper officer” within the meaning of Section 2(34) the Customs Act, 1962 nor a Central Excise Officer for the purpose of Section 11A of the Central Excise Act, 1944, to demand excise duty vide impugned show cause notice.
Held: Assessee was a co-developer of Information Technology/Information Technology Enabled Services located in a Special Economic Zone (SEZ). Assessee was procuring High-Speed Diesel (HSD) without payment of excise duty from a local refinery in terms of Section 26(1)(c) of the Special Economic Zones Act. 2005 read with Rule 27 of the SEZ Rules, 2006 for carrying on authorised operation in the “Processing Area”. Department issued show cause notice seeking to recover an amount of excise duty from assessee on HSD Oil supplied between 1.4.2015 to 2.10.2015. Assessee’s case was that the impugned 2015 Guidelines could not deny the exemptions provided under the provisions of the Special Economic Zones Act, 2005 and the aforesaid Rules by altering the location of the power plant of assessee to an area in a “Non Processing Area” to make all the procurements dutiable for generation of electricity for being supplied to units located in the Special Economic Zones. Department issued show cause notice seeking to recover an amount of excise duty from assessee on HSD Oil supplied between 1.4.2015 to 2.10.2015. Assessee contended that even if excise duty had to be collected, it had to be collected from the manufacturer /refinery concerned which supplied HSD Oil to assessee. It was held that DTA supplier was not only entitled to the exports benefits under the Foreign Trade Policy in terms of Rule 23 of Special Economic Zone Rules, 2006 but was also entitled to clear the goods under bond or claim rebate of tax/duty paid by it in terms of Rule 30 of the aforesaid Rules. That apart procurement of HSD by assessee from IOCL did not qualify as an import within the meaning of Section 2(o) of the Special Economic Zones Act, 2006. Therefore, there could not be a demand for customs duty and interest thereon on the excise duty foregone by IOCL at the time of clearance of HSD from its factory/refinery to assessee under section 28 or 28AA of the Customs Act, 1962. Further, Rule 47(5) of the Special Economic Zones Rules, 2006 had been inserted vide GSR 772 (E) dated 5.8.2016 with effect from 8.8.2016. As per the above provision, “Refund, Demand, Adjudication, Review and Appeal with Regard to Matters Relating to Authorised Operations under the Special Economic Zones Act, 2005, transactions, and goods and services related thereto, shall be made only by the jurisdictional Customs and Central Excise Authorities in accordance with the relevant provisions contained in the Customs Act, 1962, the Central Excise Act, 1944 and the Finance Act, 1994 and the rules made the render or notification issued under”. Thus, the impugned show cause notice was also liable to be declared as without jurisdiction. Even if, it was assumed that the clearance of HSD Oil was without the authority of law by the DTA supplier (IOCL). Only the jurisdictional officer concerned under the Central Excise Act, 1944 within whose jurisdiction IOCL was registered was competent to issue a show cause notice to recover the excise duty under section 11A of the Central Excise Act, 1944. Therefore, the demand proposed was liable to be quashed.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
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