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3.2 The departments case is that the appellant removed duty free imported gold jewellery 2294.840 gm. valued at Rs. 29,44,823/- involving custom duty of Rs. 3,35,795/- without payment of custom duty in a clandestine manner. Therefore, the duty and interest is recoverable from the appellant under Section 28 read with Section 28AB of Customs Act, 1962 read with Section of SEZ Act, 2005 and Rule 34 of Special Economic Zone, 2006.
4. The appellant mainly submits that:
(i) SEZ is considered a foreign territory for the purpose of trade operations, duties and tariffs; and Section 53(1) of SEZ Act, 2005 provide that a Special Economic Zone shall be deemed to be a territory outside the Customs Territory of India.
(ii) The work relating to SEZ is now governed by the provisions of the Special Economic Zones Act, 2005 and Special Economic Zones Rules, 2006 (hereinafter referred to as SEZ laws). The said SEZ laws do not confer jurisdiction on the Addl. Commissioner of Customs (Air Cargo Exports) to adjudicate matter arising out of activities within the SEZ.
(iii) That duty free import/ procurement of all goods by SEZ unit is permitted as per the provisions contained in Section 26 of the SEZ Act, 2005 and not under Customs and Central Excise Laws. The dispute regarding utilisation of goods imported by availing exemption under provisions of SEZ Act or rules can only be adjudicated as per the provisions of SEZ laws.
(iv) The procedure regarding search and seizure contained in Section 22 read with Section 21 of SEZ Act, 2005 were not observed. Government of India MC&I (DC) vide Notification S. No. 77(F) dated 13.01.2010 has authorised jurisdictional Development Commissioner to be the Enforcement Officer in respect of notified offences committed in a SEZ.
(v) Section 51 of SEZ Act, 2005 containing overriding provision provide that the provisions of SEZ shall have effect not withstanding anything inconsistent, contained in any other law. The said overriding provision clearly provides that investigations, search and seizure and recovery of duties shall be carried out under the SEZ Act, 2005 and Rules made thereunder and not under the provisions of Customs Act, 1962.
8. Moreover, in terms of the Section 53(1) of the SEZ Act, 2005, the SEZ is deemed to be territory outside the Customs Territory of India, and the goods imported were meant for the unit in SEZ Noida. In our view, the Commissioner of Customs, Air Cargo, New Customs House, New Delhi and no jurisdiction to confiscate these goods and impose penalty on the appellant and it is only the Joint/ Dy. Commissioner/ Asstt. Commissioner of Customs, in Noida SEZ Unit, who had the jurisdiction to take necessary action. For this reason also, the impugned orders are not sustainable.