2007 (2) TMI 442 - AT - Central Excise

Summary

Issues:
Interpretation of exemption notification for SEZ units regarding payment of additional duty known as CVD equivalent to Central Excise duty on similar goods.

Analysis:
The case involved ten appeals with a common issue regarding the payment of additional duty known as CVD for SEZ units engaged in reprocessing plastic materials. The appellants argued for exemption from Central Excise duty under specific notifications, despite an added explanation excluding plastic materials reprocessed in SEZs from the exemption. The appellants contended that the explanation should not negate the substantive right granted under the notification, as it was meant for clarification purposes only. They emphasized that SEZ units should not be disadvantaged compared to other manufacturers, and exemptions applicable to non-SEZ units should extend to SEZ units as well.

The respondent, represented by the learned DR, maintained that the explanation in the notification clearly excluded SEZ units from the exemption and cited the proviso to Section 5A of the Central Excise Act, stating that unless specifically provided, no exemption shall apply to excisable goods produced in SEZs. The respondent argued that since the notification did not explicitly grant exemptions to goods manufactured in SEZs, the exemption under the notification could not be extended to SEZ units, especially with the express exclusion in the explanation.

The Tribunal analyzed the submissions and rejected the appellants' argument that SEZ units should not be discriminated against. It noted that Section 3 of the Central Excise Act outlined different procedures for duty payment for SEZ units compared to non-SEZ units. The Tribunal highlighted the proviso to Section 5A, emphasizing that exemptions must be explicitly provided for goods produced in SEZs in the notification itself. Since the notification in question did not include such a provision, the Tribunal upheld the exclusion of SEZ units from the exemption and dismissed the appeals, affirming the Commissioner's order.

In conclusion, the Tribunal ruled that the exemption notification did not apply to SEZ units for the payment of additional duty, as the explanation clearly excluded plastic materials reprocessed in SEZs from the exemption. The Tribunal emphasized the need for explicit provisions in notifications to extend exemptions to goods manufactured in SEZs, and since the notification lacked such a provision, the exemption could not be granted to SEZ units.