Development Commissioner under SEZ is not a proper officer to demand excise duty

IN THE HIGH COURT OF JUDICATURE AT MADRAS

The Relevant Text of the Order as follows :

69. Further, Rule 47(5) of the Special Economic Zones Rules, 2006 has 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”.

70. The impugned show cause notice is also liable to be declared as without jurisdiction. Even if, it is 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 is registered is competent to issue a show cause notice to recover the excise duty under section 11A of the Central Excise Act, 1944.

71. Therefore, on this count also the impugned show cause notice issued by the 2nd respondent is unsustainable and the demand proposed is liable to be quashed.

Development Commissioner under SEZ is not a proper officer to demand excise duty

72. As such the 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.

73. Further, the demand proposed is revenue neutral in as much as the duty paid by the supplier is available by way of rebate under the provisions of the Central Excise Rules, 2002.

74. Even otherwise in view of the consistent policy of Government to allow procurement of goods from 2012 vide 2012 Guidelines dated 21.3.2012 and thereafter 2016 Guidelines dated 16.09.2016, denial of the benefit of procurement of goods without payment of duty is unsustainable under the impugned 2015 Guidelines dated 6.4.2015.

75. Even otherwise there is no rationale in recognising exemption vide 2012 Guidelines and withdrawing the same the year 2015 vide impugned 2015 Guideline and thereafter reintroducing the same in the year 2016 with slight modification.

76. In the light of the above discussion both the writ petitions stand allowed. Connected miscellaneous petitions are closed. No cost.

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Tags: Judgement, CUSTOM, EXCISE, High Court