Case Details: Prestige Polymers Pvt. Ltd. Versus Commissioner of Customs, Indore (2025) 30 Centax 60 (Tri.-Del)
Judiciary and Counsel Details
- Justice Dilip Gupta, President & Shri P.V. Subba Rao, Member (T)
- Ms Anjali Jha Manish & S/Shri Priyadarshi Manish, Advs., for the Appellant.
- S/Shri P.R.V. Ramanan, Special Counsel & Rakesh Kumar, Authorised Representative, for the Respondent.
Facts of the Case
The appellant, operating within a Special Economic Zone (SEZ), was subjected to scrutiny by customs authorities who, upon examination, identified certain activities undertaken within the SEZ premises that were allegedly not in connection with authorised operations as defined under the Special Economic Zones Act, 2005. Based on this finding, customs authorities initiated proceedings against the appellant under the provisions of the Customs Act, 1962. Invoking Section 7 of the Customs Act, 1962, the authorities treated the SEZ premises as a customs port or equivalent customs station, and held the appellant liable for violation of customs law.
Aggrieved by this action, the appellant filed an appeal before the Delhi Customs, Excise and Service Tax Appellate Tribunal (CESTAT), contending that the proceedings were legally unsustainable in light of Section 53 of the SEZ Act, 2005, which creates a statutory deeming fiction by which SEZs are to be treated as territories outside the customs territory of India for the purpose of authorised operations. The appellant further relied on Section 51 of the SEZ Act, 2005, to argue that the SEZ Act overrides any inconsistent provisions in other laws, including the Customs Act, and that the initiation of customs proceedings was therefore ultra vires the statutory framework.
CESTAT Held
The Hon’ble CESTAT held that Section 53 of the SEZ Act, 2005 indeed creates a legal fiction whereby a Special Economic Zone is deemed to be a territory outside the customs territory of India; however, this fiction is expressly confined to the conduct of authorised operations. The Tribunal clarified that if any activity within the SEZ falls outside the ambit of authorised operations, then such activity would not enjoy the benefit of the SEZ’s deemed foreign territory status. In such circumstances, the SEZ itself would be treated as a customs port, airport, or Inland Container Depot (ICD) under Section 7 of the Customs Act, 1962, and all provisions of the Customs Act would fully apply to the impugned activity. The Tribunal, however, affirmed that in the event of any inconsistency between the SEZ Act and other laws, the overriding clause in Section 51 of the SEZ Act would prevail.
List of Cases Cited
- Advait Steel Rolling Mills Pvt. Ltd. v. Union of India — 2012 (286) E.L.T. 535 (Mad.) — Distinguished [Paras 62, 76, 77]
- Collector v. Pradyumna Steel Ltd. — 1996 (82) E.L.T. 441 (S.C.) — Relied on [Paras 43, 46, 47]
- Commissioner V. Canon India Pvt. Ltd. — 2024 (390) E.L.T. 545 (S.C.) = (2024) 24 Centax 117 (S.C.) — Relied on [Para 32]
- Commissioner v. Dilip Kumar and Company — 2018 (361) E.L.T. 577 (S.C.) — Relied on [Para 87]
- Commissioner v. India Containers Ltd. — 2017 (355) E.L.T. 326 (Bom.) — Relied on [Para 45]
- Commissioner v. Merino Panel Products Ltd. — 2023 (383) E.L.T. 129 (S.C.) = (2022) 1 Centax 59 (S.C.) — Relied on [Para 44]
- Essar Steel Ltd. v. Union of India — 2010 (249) E.L.T. 3 (Guj.) — Distinguished [Paras 62, 74, 76, 77]
- Essar Steel Ltd. v. Union of India — 2010 (255) E.L.T. A115 (S.C.) — Distinguished [Paras 62, 76]
- GMR Aerospace Engineering Limited v. Union of India — 2019 (31) G.S.T.L. 596 (A.P.) — Distinguished [Paras 62, 78]
- J.K. Steel Ltd. v. Union of India — 1978 (2) E.L.T. (J 355) (S.C.) — Relied on [Paras 42, 43]
- Ota Falloons Forwarders Pvt. Ltd. v. Union of India — 2018 (362) E.L.T. 947 (Cal.) — Relied on [Para 46]
- Union of India v. GMR Aerospace Engineering Ltd. — (2023) 6 Centax 155 (S.C.) — Distinguished [Paras 62, 78]
List of Departmental Clarification Cited
- Circular F. No. 6/2/2008-SEZ, dated 30-6-2008 [Para 76]
List of Notifications Cited
- Notification No. 17/2001-Cus., dated 1-3-2001 [Paras 85, 87]
- Notification No. 21/2002-Cus., dated 1-3-2002 [Paras 84, 85, 87, 87]
- Notification No. 45/2005-Cus., dated 16-5-2005 [Paras 4, 59]
- Notification No. 18/2011-Cus., dated 1-3-2011 [Para 59]
- Notification No. 12/2012-Cus., dated 17-3-2012 [Paras 4, 11, 50, 53, 54, 80, 84, 87,92]
- Notification No. 12/2016-Cus., dated 1-3-2016 [Para 80]
