2009 (5) TMI 704 - AT - Central Excise

Stay/Dispensation of pre-deposit - Cenvat/Modvat - deemed export - Held that - In terms of the SEZ Act, supply of goods to developers would be deemed to be export. Once, it is considered to be export, then no duty can be demanded - pre-deposit waived.

Summary

Issues:
1. Requirement of pre-deposit by the appellant.
2. Classification of supply of Aluminium Extrusions to SEZ Developers.
3. Applicability of Rule 6 of the Cenvat Credit Rules.
4. Consideration of supply to developers as export.
5. Waiver of pre-deposit and stay on recovery of dues.

Analysis:
1. The appellant was directed to pre-deposit a specific sum, including recovery of credit and a penalty under Section 15(1) of the Cenvat Credit Rules, 2004. Both parties were heard, and it was noted that the appellant supplied Aluminium Extrusions to SEZ Developers without duty payment, deemed as export under the SEZ Act. The Board's Circular No. 29/2006-Cus. was referenced to support this position.

2. The revenue argued that Rule 6 of the Cenvat Credit Rules applied, requiring payment of 10% of the sale value of goods. The appellant's advocate failed to demonstrate that Rule 6 was inapplicable. However, the Tribunal found that since the goods supplied to SEZ were dutiable and deemed as export, Rule 6 did not apply. The Departmental Representative contended that the supply should not be considered export.

3. After careful consideration, the Tribunal leaned in favor of the appellant, stating that supply to developers under the SEZ Act constituted export, exempting it from duty payment. As a result, the Tribunal waived the pre-deposit of dues and ordered a stay on coercive measures for recovery until the appeal's disposal. The appeal was scheduled for further hearing on a specific date as requested by the appellant's Counsel.

This judgment highlights the interpretation of export under the SEZ Act, the non-applicability of Rule 6 of the Cenvat Credit Rules to dutiable goods supplied to SEZ, and the Tribunal's decision to waive pre-deposit and stay recovery pending appeal resolution.