No Export Duty On DTA–SEZ Supplies | Supreme Court Dismisses Union of India’s Appeals Against Adani Power Ltd.
Kiran Raj
The Supreme Court of India Division Bench of Justice B.V. Nagarathna and Justice R. Mahadevan has held that the movement of goods from a Domestic Tariff Area (DTA) to a Special Economic Zone (SEZ) amounts to a domestic supply and not an export outside India, thereby exempting such transactions from export duty under the Customs Act, 1962. The Court dismissed appeals by the Union of India challenging the Gujarat High Court’s view, which had earlier concluded that export duty could not be levied on these transfers. In affirming that the statutory definition of “export” under the Customs Act does not extend to DTA–SEZ supplies, the Bench provided relief to Adani Power Ltd. and other entities, clarifying the interplay between the Customs Act, 1962 and the Special Economic Zones Act, 2005
The dispute arose from the Union of India’s attempt to levy export duty on goods supplied by Adani Power Ltd. and other entities from the Domestic Tariff Area (DTA) to units and developers situated in Special Economic Zones (SEZs). The Union contended that such supplies should be treated as exports under the Customs Act, 1962, thereby attracting duty. The respondents argued that movement from DTA to SEZ was not an export outside India but a domestic supply falling under the Special Economic Zones Act, 2005.
The case involved multiple appeals from judgments of the Gujarat High Court, Andhra Pradesh High Court, Madras High Court, Karnataka High Court, and Bombay High Court. The statutory provisions examined included Sections 2(18), 2(27), and 12 of the Customs Act, 1962, read with Sections 2(i), 2(m), 2(za), 26, and 51 of the SEZ Act, 2005. Evidence consisted of legislative definitions and interpretative material from the two enactments. The respondents maintained that Section 51 of the SEZ Act provided overriding effect, meaning supplies from DTA to SEZ could not be considered exports for the purposes of imposing duty. The High Courts had held in favour of the respondents, which the Union of India appealed before the Supreme Court.
The Bench examined the questions framed in the impugned judgment: “Whether export duty can be imposed under the provisions of the Customs Act, 1962? Whether export duty can be levied under the provisions of the Special Economic Zones Act, 2005? Whether export duty can be imposed under the Customs Act, 1962 by incorporating the definition of the terms ‘Export’ under the SEZ Act, 2005 into the Customs Act, 1962?”
Referring to the Gujarat High Court’s findings, the Supreme Court noted: “In view of the above discussion and findings arrived at as well as conclusion drawn, the levy of export duty on goods supplied from the Domestic Tariff Area to the Special Economic Zone is not justified. The petitioners are, therefore, not to be called upon to pay export duty on movement of goods from Domestic Tariff Area to Special Economic Zone units or developments.”
The Bench recorded: “We find that the High Court has rightly arrived at the conclusions in the aforesaid paragraphs on a correct interpretation of the provisions of the aforesaid two Acts. In the circumstance, we do not find any reason to interfere with the impugned judgment. Hence, the appeals are dismissed.”
“On a conjoint reading of the aforesaid provisions, we find that Section 12 of the Customs Act, 1962 is the charging Section. However, under Section 26 of the SEZ Act, power is reserved to grant an exemption or a concession if under the provisions of the Customs Act, 1962, a duty is leviable as per the charging Sections.”
“It is also necessary to observe as submitted by the learned senior counsel for the respondent(s) that the Madras High Court as well as the Andhra Pradesh High Court have also taken a similar view as discussed in the aforesaid impugned judgment. In the circumstances, all appeals arising therefrom are also dismissed.” Finally, it concluded that “all pending application(s) shall stand disposed of.”
Case Title: Union of India v. Adani Power Ltd.
Case Number: Civil Appeal No. 4489 of 2023 (with connected appeals)
Bench: Justice B.V. Nagarathna and Justice R. Mahadevan
