If Goods Imported Into SEZ Are Not Used For Authorised Operations But Sold In Domestic Tariff Area, Duty Has To Be Paid: CESTAT

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that if goods imported into an SEZ are not used for the authorised operations but are sold in Domestic Tariff Area, duty has to be paid. Section 51 of the Special Economic Zones (SEZ) Act, 2005 states that the provisions of the SEZ Act will take precedence over any other conflicting laws, meaning that if there is a disagreement between the SEZ Act and another law, the SEZ Act will be the governing rule. The Bench of Dilip Gupta (President) and P. V. Subba Rao (Technical) has observed that, “if goods imported into an SEZ are not used for the authorised operations but are sold in Domestic Tariff Area, duty has to be paid. If duty is not paid or short paid and as a result a demand has to be raised, it must be done as per the Customs Act by the jurisdictional Customs Officers.” In this case, assessee/prestige is an authorised unit in the Special Economic Zone, Indore. Assessee imported LED display panels of televisions of Malaysian origin through eight Bills of Entry without paying any duty, brought them into its SEZ unit and then cleared them under six Bills of Entry to buyers in Domestic Tariff Area. The department felt that assessee had not paid BCD and SAD on the six Bills of Entry by wrongly claiming the benefit of the Notifications. A show cause notice was issued by the Commissioner of CGST & Central Excise, Indore. The Commissioner had confirmed the demand under section 28(4) of the Customs Act. Aggrieved by the Commissioner of CGST & Central Excise, Indore, the assessee has filed an Appeal before the Tribunal. The assessee contended that during conflict between the SEZ Act and the Customs Act, the SEZ Act would prevail by virtue of section 51 of the SEZ Act. Also, the SCN was not issued by the specified officer nor was the adjudication done under the SEZ Act. Whereas the department contended that the SCN and the impugned order do not relate to the authorised operations within the SEZ and therefore, the provisions of section 51 of the SEZ Act would not apply. The Tribunal observed that the goods in this case have been brought into the DTA falling under the jurisdiction of the Commissioner of Customs, Indore. If any duty is short paid, he has both the authority and duty to recover it. Merely because the goods were removed from SEZ unit as provided under section 30 of the SEZ Act and not directly imported from outside India would make no difference. The bench stated that not only were the Bills of Entry were filed by assessee but even the duty was assessed and paid by it and not by the buyer. So, assessee was not only the exporter but was also the importer. “Prestige/Assessee had not only filed the DTA Bills of Entry but had also paid the duties of Customs and cleared the goods and after clearing sold them to its buyers at destination. Prestige continued to be the owner of the goods until they were sold. Therefore, as the owner of the goods, Prestige was also the importer in addition to being the exporter in respect of the goods cleared through DTA Bills of Entry, added the bench.” In view of the above, the Tribunal allowed the appeal. Counsel for Appellant/ Assessee: Anjali Jha Manish, Priyadarshi Manish Counsel for Respondent/ Department: P.R.V. Ramanan, Rakesh Kumar Case Title: M/s Prestige Polymers Pvt. Ltd. V. The Commissioner of Customs Case Number: Customs Appeal No. 51470 of 2019 Click Here To Read/Download The Order

If Goods Imported Into SEZ Are Not Used For Authorised Operations But Sold In Domestic Tariff Area, Duty Has To Be Paid: CESTAT

Mehak Dhiman

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