2014 (6) TMI 902 - HC - Central Excise

Supplies to SEZ from DTA - Clearance to be treated as dutiable goods or exempted goods - whether in respect of supplies made by DTA unit to SEZ developer prior to 13-12-2008 has to be treated as exempted clearances as per CENVAT Credit Rules and consequently provisions of Rule 6(3) of CCR, 2004 applies or not - Held that - Tribunal while rendering the impugned decision, has relied on its earlier decision in the case of Sujana Metal Products Limited 2011 (9) TMI 724 - CESTAT, BANGALORE . It is submitted by the learned counsel for the appellant that the Hon ble Karnataka High Court has dismissed the appeal preferred against the aforesaid judgment of the Tribunal and the matter is still pending before the Hon ble Supreme Court. In the circumstances, we think that we cannot take a different view in this matter. - Decided against Revenue.

Summary

Issues:
1. Interpretation of supplies made from DTA to SEZ developer/promoter as 'exports' under Rule 6(6) of CENVAT Credit Rules, 2004.
2. Application of Section 51 of the SEZ Act, 2005 and exemption provisions under Section 26 of SEZ Act to determine the status of impugned goods.
3. Applicability of the amendment to Rule 6(6)(i) of Cenvat Credit Rules, 2004 with retrospective effect.
4. Consideration of invoking extended period of limitation for demand of amounts and imposition of penalties under Section 11A(1) of the Central Excise Act, 1944.

Analysis:
1. The first issue revolves around the classification of supplies from DTA to SEZ developer/promoter as 'exports' under Rule 6(6) of the CENVAT Credit Rules, 2004. The Tribunal held in favor of considering these supplies as 'exports,' which entitled them to exceptions provided under the rule. The Revenue challenged this interpretation, questioning the correctness of the Tribunal's decision.

2. The second issue involves the application of Section 51 of the SEZ Act, 2005 and the exemption provisions under Section 26 of the SEZ Act to determine the status of the impugned goods. The Tribunal applied the overriding effect of Section 51 to classify the goods as 'exports,' while ignoring the exemption provisions under Section 26. This led to a dispute over the correct legal interpretation and application of these statutory provisions.

3. The third issue pertains to the applicability of the amendment to Rule 6(6)(i) of the Cenvat Credit Rules, 2004 with retrospective effect. The CESTAT held that the amendment, introduced through Notification No. 50/2008-C.E., should be applied retrospectively. However, the Revenue contested this interpretation, citing a circular clarifying the prospective nature of the amendment. The conflicting views on the retrospective application of the amendment raised a significant legal question.

4. The final issue concerns the consideration of invoking the extended period of limitation for demand of amounts and imposition of penalties under Section 11A(1) of the Central Excise Act, 1944. The CESTAT's stance that the question of invoking the extended period does not arise in cases of wilful misstatement or suppression of facts was challenged by the Revenue. The dispute centered on the applicability of the extended period in cases involving evasion of duty through intentional actions.

The High Court, comprising Kalyan Jyoti Sengupta and Sanjay Kumar, JJ., dismissed the appeal by the Revenue against the Tribunal's judgment. The Court noted the reliance placed by the Tribunal on a previous decision and the pendency of a related matter before the Supreme Court. In light of these circumstances, the Court declined to take a different view and upheld the Tribunal's decision. As a result, the appeal was dismissed, with no order as to costs.