Zip Zap Exim (P) Ltd vs Union Of India on 29 January, 2020

1. Outcome
The petition was allowed. The impugned communication dated 07th September, 2018, demanding an additional bank guarantee component for IGST, was quashed and set aside. The Court declared that the petitioner is not liable to furnish the bank guarantee for the IGST portion (Rs. 15,20,183/-) for re-export of goods. However, the respondent authority was clarified to be at liberty to adjudicate the issue of levy of IGST in the pending proceedings in accordance with law.

2. Core Issue
The core issue was whether the Integrated Goods and Services Tax (IGST) component should be included in the calculation of "customs duty that may be leviable on the re-determined value of the goods" for the purpose of furnishing a 25% bank guarantee, as per a previous order of the High Court, for the provisional release and re-export of goods seized on grounds of undervaluation by an SEZ unit.

3. Key Facts
* Petitioner: Zip Zap Exim (P) Ltd, an approved SEZ unit under the Special Economic Zones Act, 2005, engaged in trading and export.
* Search & Seizure: On 08th January, 2018, DRI officers conducted a search and detained/resumed goods based on alleged undervaluation/mis-declaration of value.
* Request for Re-export: The petitioner requested permission to re-export the seized goods.
* Prior Litigation - SCA No. 9128/2018: Petitioner approached the High Court seeking permission for re-export. The Court, on 20th June, 2018, directed the respondents to decide the petitioner's request.
* DRI's Initial Condition: On 03rd July, 2018, the respondent No. 2 ordered release for re-export subject to the petitioner furnishing a bond for the re-determined value of goods and a 25% bank guarantee of the re-determined/enhanced value.
* Prior Litigation - SCA No. 11209/2018: The petitioner challenged this condition, seeking to furnish a bank guarantee based on customs duty.
* High Court Order (09th August, 2018) in SCA No. 11209/2018: The Court modified the condition, directing the bank guarantee to be "25% of the customs duty that may be leviable on the re-determined value of the goods."
* Petitioner's Compliance & Respondent's Demand: The petitioner furnished a bank guarantee of Rs. 9,18,723/-. However, respondent No. 3, via communication dated 07th September, 2018, demanded an additional bank guarantee of Rs. 15,20,183/-, claiming that the previous High Court order implied the inclusion of IGST in "Custom Duty," and that the re-determined Customs Duty (including IGST) amounted to Rs. 97,55,625/-, making 25% equal to Rs. 24,38,906/-. The communication also requested an auto-renewal clause.
* Current Petition - SCA No. 15388/2018: The petitioner challenged this demand for the IGST component in the bank guarantee.
* Interim Order (04th October, 2018) in current SCA: The Court allowed provisional re-export on an undertaking by the petitioner's Director that the remaining bank guarantee would be furnished if the Court ultimately did not accept the petitioner's contention.

4. Arguments (Taxpayer vs Revenue)
* Taxpayer (Zip Zap Exim (P) Ltd):
* Argued that as an SEZ unit, there is no provision for levy of IGST on the imported goods or the exported goods under the Integrated Goods and Services Tax Act, 2017.
* Contended that the respondent's insistence on a bank guarantee for the IGST component was without legal basis and misinterpreted the previous High Court order which explicitly referred to "customs duty" only.
* Highlighted that the goods were seized and the purpose was re-export, implying no levy of IGST.
* Revenue (Union of India & Others):
* Submitted that the adjudication proceedings were ongoing, and the leviability of IGST on imported goods was yet to be decided by the authority.
* Maintained that as per the High Court's order dated 09.08.2018, the petitioner was required to furnish a bank guarantee of 25% of the "Custom Duty that may be leviable on the re-determined value of the goods for re-export," implying that their calculation included IGST as part of 'custom duty'.
* Calculated the "re-determined Custom Duty" (including IGST) at Rs. 97,55,625/-, thus demanding 25% of this amount (Rs. 24,38,906/-), which included the disputed IGST component of Rs. 15,20,183/-.
* Also noted that the bank guarantee submitted by the petitioner lacked an auto-renewal clause.

5. Court’s Reasoning
* The High Court emphasized that its previous order dated 09th August, 2018, in SCA No. 11209 of 2018, was specific: the bank guarantee was to be "25% of the customs duty that may be leviable on the re-determined value of the goods."
* The Court found that by demanding a bank guarantee that included an IGST component, the respondent No. 3 effectively went beyond or misinterpreted the clear mandate of the earlier court order.
* It reasoned that based on its previous clear directive, the respondent authority was not entitled to ask for a bank guarantee on the amount of IGST on the re-determined value of goods for the purpose of provisional release and re-export.
* However, the Court clarified that its decision did not preclude the respondent authority from adjudicating the issue of levy of IGST in the pending proceedings in accordance with law, indicating that the ruling was confined to the conditions for provisional release/re-export as per its prior order.

6. Statutory References
* Special Economic Zones Act, 2005 (SEZ Act)
* Section 112 of the Customs Act
* Integrated Goods and Services Tax Act, 2017

7. Precedents Cited
The Court primarily relied on its own previous orders in the same series of litigation:
* Order dated 20th June, 2018, in Special Civil Application No. 9128 of 2018.
* Order dated 09th August, 2018, in Special Civil Application No. 11209 of 2018 (the key order being interpreted and enforced).
* Interim Order dated 04th October, 2018, in the present Special Civil Application No. 15388 of 2018.
(No other external case law or judicial precedents were cited.)