2016 (1) TMI 1160 - AT - Central Excise

Claim of refund filed under Rule 5 of Cenvat Credit Rules 2005 consequent to supply of goods to SEZ unit - Held that - As seen from the letter F. NO. 9/SEZ/181/2006/659 dated 10-2-2006 issued by the Development Commissioner to M/s. Oil Field Warehouse Services Pvt. Ltd. while extending all the facilities and entitlements admissible to a unit in SEZ it clearly mentions the authorized operations as rendering services such as (i) logistics & related services (ii) maintenance and repair of equipment and (iii) supply of personnel. Further as per Rule 18(5) of SEZ Rules 2006 The Units in Free Trade and Warehousing Zones or units in Free Trade and Warehousing Zone set up in other Special Economic Zone shall be allowed to hold the goods on account of the foreign supplier for dispatches as per the owner s instructions and shall be allowed for trading with or without labelling packing or repacking without any processing . Further the appellants have brought to my notice Notification No. S.O.1846(E) dated 27-10-2006 issued by the Ministry of Commerce and Industry listing warehousing and commercial operations as authorized operations. Hence hold that the clearances made by the respondents to M/s. Oil Field Warehouse Services Pvt. Ltd. a unit in SEZ would constitute exports and are for the authorized operations as laid down in the SEZ Act. Commissioner (Appeals) correctly upheld the order of original authority sanctioning claim of refund filed under Rule 5 of Cenvat Credit Rules 2005 consequent to supply of goods to SEZ unit.

Summary

Issues: Revenue's challenge to refund claim under Rule 5 of Cenvat Credit Rules, 2005 for goods supplied to SEZ unit.

Analysis:
The appeal was filed by Revenue challenging the Commissioner (Appeals) order upholding the refund claim under Rule 5 of Cenvat Credit Rules, 2005 for goods supplied to a SEZ unit. The department contended that the SEZ unit, being a warehousing unit without physical manufacturing, engaged in unauthorized operations by procuring goods duty-free. It argued that the SEZ unit could not be the owner of goods as it provided warehousing services only, thus the supply of goods did not qualify as export.

The Commissioner (Appeals) carefully considered the department's argument. Referring to a letter and relevant rules, the Commissioner noted that the SEZ unit was authorized for specific operations such as logistics services, maintenance, repair of equipment, and supply of personnel. Citing Rule 18(5) of SEZ Rules, 2006, which allowed holding goods for dispatches as per the owner's instructions without processing, and a notification listing warehousing and commercial operations as authorized, the Commissioner concluded that the clearances made to the SEZ unit constituted exports for authorized operations under the SEZ Act.

Based on the analysis of Rule 18(5) of SEZ Rules and the authorization for warehousing and commercial operations, the Commissioner found no grounds to interfere with the impugned order. Consequently, the appeal was dismissed, and the operative part of the order was pronounced at the conclusion of the hearing.