2016 (8) TMI 1297 - AT - Central Excise

CENVAT credit - supplies made to SEZ developer - 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 CCR and consequently provisions of Rule 6(3) of CCR 2004 applies or not? - Held that - reliance placed in the case of S.P. Fabricators Pvt. Ltd. Versus Commissioner of Central Excise, Belapur 2013 (9) TMI 1108 - CESTAT MUMBAI , where it was held that after enactment of the Special Economic Zones Act 2005 w.e.f. 10.02.2006 supplies to SEZ from DTA are treated as export of dutiable goods and entitled to benefit as such, including that of exception in Rule 6(6) of CCR 2004, of not requiring separate accounts of dutiable and non-dutiable inputs/services to be maintained - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of cenvat credit in respect of supplies made to SEZ developer.
- Whether supplies made by DTA unit to SEZ Developer prior to 13.12.2008 are to be treated as 'exempted clearances' under Cenvat Credit Rules.

Analysis:
1. The appeal was against the Commissioner's order upholding the denial of cenvat credit for supplies to SEZ developer. The appellant, engaged in manufacturing Concrete Blocks, availed cenvat credit for duty paid on raw materials. They supplied finished goods to SEZ developers without duty payment, leading to a show-cause notice and subsequent denial of credit.

2. The counsel for the appellant argued that the issue revolved around whether supplies made by DTA unit to SEZ Developer before 13.12.2008 should be considered 'exempted clearances' under Cenvat Credit Rules. Citing various decisions, including Sujana Metal Products Ltd. case, it was contended that such supplies should not be treated as exempted clearances, thus Rule 6(3) of Cenvat Credit Rules 2004 should not apply.

3. The AR, on the other hand, acknowledged the judgments favoring the appellant's stance. Following the precedent set by previous decisions, it was established that post the enactment of the Special Economic Zones Act 2005, supplies from DTA to SEZ are treated as export of dutiable goods. Therefore, the benefit of exception in Rule 6(6) of Cenvat Credit Rules 2004, which does not mandate separate accounts for dutiable and non-dutiable inputs/services, applies. Consequently, the judgment favored the appellant, setting aside the impugned order with any consequential relief.

4. The judgment was pronounced on 18.08.2016, allowing the appeal and providing relief to the appellant based on the established legal principles and precedents cited in favor of treating supplies to SEZ developers from DTA as exports of dutiable goods.