2011 (9) TMI 148 - AT - Central Excise

Supply from DTA unit to SEZ unit - whether supplies made to the SEZ developers for the period prior to 31/12/2008 will attract the provisions of Rule 6 (6) of Cenvat Credit Rules or not or whether the appellant is liable to pay a 10% of the value of the goods supplied to SEZ developer in case no separate accounts have been maintained in respect of dutiable goods and goods supplied without payment of duty. - Held that - The amendment to Rule 6 (6) (i) of the CCR, 2004 by the amending Notification No.50/2008-CE (NT) dated 31/12/2008 shall be applicable w.e.f 10/09/2004 when the CCR, 2004 came into existence and, therefore, exception provided under Rule 6 (6) of Cenvat Credit Rules, 2004 shall be applicable to supply of exempted goods both to SEZ units and SEZ developers/promoters.

Summary

Issues:
Interpretation of Rule 6 (6) of Cenvat Credit Rules, 2004 for supplies to SEZ developers prior to 31/12/2008.
Requirement of maintaining separate accounts for dutiable goods supplied without duty payment to SEZ developers.

Analysis:
The appeal challenged an order-in-appeal passed by the Commissioner of Central Excise, Pune-III, regarding duty demand on goods supplied to an SEZ developer without payment of duty under bond. The appellant, a manufacturer of goods under Chapter 68 of the Central Excise Tariff Act, cleared products to the SEZ developer and availed Cenvat Credit on inputs and capital goods. The dispute arose as the department contended that the appellant failed to maintain separate accounts for dutiable goods supplied without duty payment to the SEZ developer, necessitating a 10% payment of the value of goods. The jurisdictional Assistant Commissioner confirmed the duty demand, imposing interest and a penalty. The Commissioner (Appeals) upheld this decision, leading to the appeal before the Tribunal.

The appellant argued that supplies to SEZ developers were deemed exports, citing a clarificatory amendment to Rule 6 (6) of Cenvat Credit Rules, 2004 with retrospective effect. They relied on a Tribunal judgment in a similar case to support their position. The Revenue's representative supported the lower authorities' findings but acknowledged that the appellant would be entitled to relief based on a previous Tribunal ruling.

The Tribunal deliberated on whether supplies to SEZ developers before 31/12/2008 fell under Rule 6 (6) of Cenvat Credit Rules and if the appellant was liable for a 10% payment without separate accounts. Referring to a previous case, the Tribunal concluded that supplies to SEZ units were to be treated as exports, exempting them from Cenvat Credit Rules provisions. The ruling clarified that the amendment to Rule 6 (6) applied from the inception of Cenvat Credit Rules, absolving the appellant from the duty demand. Consequently, the impugned order was set aside, and the appeal was allowed with any necessary consequential relief.