Case Law Details
Maithan Alloys Limited Vs Union of India (Andhra Pradesh High Court)
Andhra Pradesh High Court held that the phrase ‘duty of customs’ used in Section 26(1)(a) of SEZ Act only refers to duty leviable under Customs Act, 1962 but the said phrase does not include cess under GST Compensation Act. Thus, SEZ units are not exempted from payment of compensation cess on import of coal.
Facts- The petitioner is engaged in the business of ferro alloys manufacturing. It was established as a SEZ unit per the terms of the Special Economic Zones Act, 2005 on obtaining letter of approval. As per Section 26 of the SEZ Act, the petitioner’s unit is exempt from paying any duty, tax or cess under the Customs Act, 1962 or Customs Tariffs Act, 1975.
The petitioner sent letters seeking clarification from the Director (SEZ) for exemption of cess payable under the Goods and Services Tax (Compensation to States) Act, 2017 on the import of coal under the Customs Act, 1962 or Customs Tariff Act, 1975.
Respondent issued impugned letter stating that Section 26(1)(a) of the SEZ Act, 2005 provides exemption to SEZ units from any duty of Customs under the Customs Act, 1962 or Customs Tariff Act, 1975. Further, under notification No.64/2017 dated 05.07.2017, the IGST leviable u/s. 3(7) of the Customs Tariff Act, 1975 is exempted on all the goods imported into India by a SEZ unit. However, no such exemption for compensation cess leviable u/s. 3(9) of the Customs Tariff Act, 1975 is provided either under the Customs Act or IGST Act. Accordingly, the respondent on an erroneous view started demanding the petitioner to submit a bond along with a bank guarantee equal to the amount of compensation cess and on fulfilling the same only allowing the goods to be brought into the SEZ area.
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