Published on: 24 November 2022 at 18:28 IST
The Bombay High Court ruled that reimporting new or unused jewelry into the Special Economic Zone for the purpose of remaking imitation jewelry by melting the imported jewelry is legal and does not require a penalty.
As a result, a bench composed of Justices KR Shriram and AS Doctor overturned a decision by the Commissioner of Customs imposing a fine of more than 2 lakhs on certain jewelers’ confiscated goods.
In addition, the Commissioner’s order sought to penalize and confiscate goods that may have been cleared in the past. The penalty, which included a fine and duty recovery, was more than a billion rupees (1,67,54,89,562 precisely).
According to the facts of the case, the petitioners made imitation jewelry made of gold, platinum, and silver that was sold to buyers around the world.
In some cases, the adornments would stay unsold because of multiple factors which the unfamiliar purchasers would exchange back to candidate on an altogether buy premise.
The imported finished jewelry that had not yet been sold was then melted, and the precious metal that came from it was used to make new jewelry.
The petitioners’ manufacturing facilities were in the Santacruz Electronic Export Processing Zone (SEEPZ).
The Special Economic Zone Act of 2005 (SEZ Act) applies to SEEPZ, which is an export processing zone that has been notified.
In 2006, the Indian government announced in a notification that SEEPZ would no longer be subject to the Special Economic Zones (Customs Procedure) Regulations, 2003 because it would be considered a port under the Customs Act.
The Office of the Commissioner of Customs seized one petitioner shipment in 2009 at Mumbai International Airport before it reached SEEPZ.
The Joint Development Commissioner of SEEPZ (DC) informed the Commissioner of Customs that the SEZ units were permitted to import, remelt, and export finished jewelry that had been imported.
Despite this, the petitioners received a show cause notice from the Assistant Commissioner of Customs explaining why the shipment should not be confiscated and a penalty imposed.
After that, the customs department issued a fine and a retroactive penalty order. Through the present plea, this was challenged in the High Court.
After the SEZ Act came into effect, the petitioner claimed that the customs department lacked the authority to investigate, seize, and issue a show cause notice against the petitioner.
The petitioners, according to the customs office, failed to properly declare that they were reimporting goods that had previously been exported.
They risk being penalized for such noncompliance, and the SEEPZ authorities ought to take action against it.
SEEPZ countered that the jewelers were contributing to the increase in the National Foreign Exchange as long as they were re-exporting the goods back into the international market without diverting them through the domestic market.
Advait Sethna their counsel, argued that the petitioners had no wrongdoing and that this was permissible.
The SEEPZ argument was accepted by the Court.
Additionally, it argued that the petitioner’s SEZ license had not yet been revoked. The Court concluded that as a result, the petitioners had legitimately and lawfully continued to take advantage of the exemption from customs duty provided by Section 26 of the SEZ at all times.
“Petitioner is only liable to remit the duty concessions that have been availed of only with respect to capital goods and unused raw material/unsold finished stock,” even if the SEZ registration of the petitioner is revoked.
The Court stated, “Even at the highest, there is absolutely no question whatsoever of going back five years and demanding customs duty on all imports made in the past.”
Case Title: Renaissance Global Limited v. UOI & Ors.