2010 (4) TMI 640 - AT - Central Excise

Penalty - appellants are engaged in the manufacture of MS pipes and tubes of various quality sizes - contention on behalf of the appellants is that the said amendment is to be construed as clarificatory in nature - Circular No. 29/2006-Cus. dated 27-12-2006 In the circular it was noted in para 3 that the procurement of goods from DTA by SEZ units and SEZ developers for their authorized operations would include supply of goods or providing services from DTA to a SEZ unit or a SEZ developer as has been denned under Section (2)(m) of SEZ Act would constitute export - appellants had cleared 419.63 MT of tubes and pipes to SEZ developers during the period from June 2007 to November 2007 without payment of excise duty - SCN issued - Held that - application for stay and waiving the demand under the impugned order till the disposal of the appeal - place this matter before the President for constitution of the appropriate Larger Bench to decide the issue as to whether the amendment introduced to Rule 6(6)(i) of the Cenvat Credit Rules 2004 under Notification No. 50/2008-C.E. (N.T.) dated 31-12-2008 is either clarificatory in nature and is retrospective in operation or not

Summary

Issues involved:
1. Interpretation of Notification No. 50/2008-C.E. (N.T.) regarding Cenvat Credit Rules.
2. Applicability of cenvat credit on goods cleared without payment of duty to SEZ developers.
3. Whether the amendment to Rule 6(6)(i) of the Cenvat Credit Rules is clarificatory and retrospective.

Analysis:
1. The appeal stemmed from the Commissioner (Appeals) decision on the penalty amount reduction for the appellants who had cleared goods to SEZ developers without duty payment. The issue revolved around the applicability of Rule 6(3)(b) of the Cenvat Credit Rules, 2004 and Section 11A of the Central Excise Act, 1944. The appellants contested the penalty amount, leading to the present appeal.

2. The appellants argued for cenvat credit entitlement based on Notification No. 50/2008-C.E. (N.T.) and the amendment to Rule 6(6)(i). They highlighted the retrospective amendment's impact on their case, citing the decision in Sujana Metal Products Ltd. v. CCE, Hyderabad. The argument focused on the availability of cenvat credit for duty paid on inputs used in goods supplied to SEZ developers under SEZ Act, 2005 and SEZ Rules, 2006.

3. The dispute centered on whether the amendment to Rule 6(6)(i) was clarificatory and retrospective. The appellants contended that the amendment should be considered clarificatory, emphasizing Circular No. 29/2006-Cus. and the benefits provided under the amendment. The Tribunal's decision in Sujana Metal Products was referenced, which viewed the amendment as clarificatory. However, the Tribunal in the present case was not persuaded by this view and decided to refer the matter to a Larger Bench for a conclusive decision on the issue.

4. The Tribunal acknowledged the appellants' reference to an order by the Commissioner of Central Excise, Rohtak, in a related matter. While the department had not challenged this order, the Tribunal noted that the Deputy Commissioner's confirmation lacked authority without the Board's approval. Additionally, the Tribunal considered the absence of a challenge by the department against the Tribunal's decision in Sujana Metal Products, indicating a prima facie case for granting a stay on the demand made under the impugned order.

5. Ultimately, the Tribunal granted the application for stay, waiving the demand under the impugned order until the appeal's disposal. The matter was directed to the President for constituting an appropriate Larger Bench to determine definitively whether the amendment to Rule 6(6)(i) was clarificatory and retrospective in operation.