No SEZ immune from penal action,says HC

No special Economic Zone (SEZ) is immune from penal action under any Central Act by any competent authority in case of violation,the Gujarat High Court (HC) has ruled.

Written by Express News Service | Ahmedabad | Published: July 19, 2010 2:45 am

Kandla SEZ units had questioned jurisdiction of Customs dept after seizure of their consignments

No special Economic Zone (SEZ) is immune from penal action under any Central Act by any competent authority in case of violation,the Gujarat High Court (HC) has ruled.

A Bench comprising Chief Justice S J Mukhopadhaya and Justice Akil Kureshi passed a judgment recently on a petition involving some units of Kandla SEZ and the Customs Department.

Certain units of Kandla SEZ had questioned the jurisdiction of the Customs after the latter seized some consignment on ground of violation of the government’s Import Policy.

The units were trading in plastic waste,and the Customs had claimed that hazardous waste was being imported along with plastic scrap in clear violation of the Import Policy.

After seizing the consignment,the Customs issued notice to the units under the provisions of the Customs Act.

The petitioners challenged the authority of the Customs inside the SEZ saying that with the inception and implementation of the SEZ Act in February 2006,the Development Commissioner of the concerned SEZ had the territorial jurisdiction over the units situated therein.

They contended that the Special Act will prevail over the Customs Act.

A single judge bench of the HC had upheld the prayer of the SEZ units observing that Customs had no territorial jurisdiction over them.

The Centre challenged the Single Judge Bench order in the Division Bench while contending that Customs had all jurisdiction powers inside the SEZ when it came to violation of Import Policy especially in the absence of any such notified authority as stipulated in the SEZ Act.

Accepting the Centre’s arguments,the Division Bench held that Customs is still empowered to confiscate any goods under the provisions of the Customs Act and impose penalty in appropriate case with regard to the units situated within the Special Economic Zone.

“The competent authorities are also empowered to take penal action under any other Central Act,if such violation is found to have been committed by any or other unit of SEZ,including the writ petitioners,with regard to which no notification has been issued under the SEZ Act,2005,” it said.

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