2012 (4) TMI 365 - AT - Central Excise

Clearance of finished goods without payment of duty to SEZ developers Revenue held that as per Rule 6 of CCR, 2004, the appellant is required to maintain separate accounts for the common inputs used for the manufacturing of finished goods cleared on payment of duty and cleared by availing exemption - the clearances made by the appellant to SEZ developers without payment of duty is clearance of exempted goods and is not covered by the exclusion clause 6 of CCR, 2004 - Held that - issue stand settled by the decision of co-ordinate bench of the Tribunal in the case of Sujana Metal Products Pvt.Ltd. Vs. CCE Hyderabad (2011 - TMI - 208174 - CESTAT, BANGALORE) assessee has cleared their finished product to SEZ developers under LUT duly accepted by the Revenue and once a LUT is executed, the appellant need not pay duty - the supplies made to SEZ are held to be export , the application of provisions of Cenvat Credit Rules for recovery of amounts on goods supplied to SEZ units in terms of Rule 6 of CCR, 2002 / CCR, 2004 does not arise - against revenue.

Summary

Issues:
1. Clearance of finished goods to SEZ developers without payment of duty.
2. Requirement to maintain separate accounts for common inputs.
3. Applicability of Rule 6 of CENVAT Credit Rules, 2004.
4. Interpretation of clearances to SEZ developers as exempted goods.
5. Comparison with decisions in similar cases.
6. Application of SEZ provisions and relevant rules.
7. Impact of LUT acceptance by Revenue authorities.
8. Conclusion based on precedents.
9. Setting aside the impugned order and allowing the appeal.

Detailed Analysis:
1. The primary issue in this case pertains to the clearance of finished goods to SEZ developers without payment of duty. The adjudicating authority held that the appellant must maintain separate accounts for common inputs used in manufacturing goods cleared with or without duty payment. The authority deemed the clearances to SEZ developers as clearance of exempted goods, requiring the appellant to pay 10% of the value of such clearances during a specific period.

2. The requirement to maintain separate accounts for common inputs is based on Rule 6 of CENVAT Credit Rules, 2004. The authority's interpretation of this rule led to the conclusion that clearances to SEZ developers without duty payment fall under the category of exempted goods, necessitating the payment mentioned earlier.

3. The central issue revolves around the applicability of Rule 6 of CENVAT Credit Rules, 2004. The authority's decision was based on this rule, emphasizing the need for separate accounts and the payment obligation for clearances to SEZ developers without duty payment.

4. The interpretation of clearances to SEZ developers as exempted goods was a crucial point of contention. The authority's finding that such clearances do not fall under the exclusion clause of Rule 6 led to the payment requirement imposed on the appellant.

5. The appellant cited decisions from similar cases to support their argument. References to judgments in cases like Sujana Metal Products Pvt.Ltd. and Sujako Interiors Pvt.Ltd. were made to establish that clearances to SEZ developers should be treated as deemed exports and not exempt from excise duty, thus challenging the authority's interpretation of Rule 6.

6. The application of SEZ provisions and relevant rules played a significant role in determining the outcome. The Tribunal considered the provisions governing clearances under LUT to SEZ developers and concluded that the issue was covered by precedents in similar cases.

7. The acceptance of LUT by Revenue authorities was crucial in the analysis. Once a LUT is executed, the appellant is not required to pay duty for clearances to SEZ developers. This fact, combined with the specific provisions governing such clearances, influenced the Tribunal's decision.

8. The Tribunal's conclusion, based on precedents like Sujana Metal Products Pvt.Ltd., favored the appellant. The Tribunal set aside the impugned order, citing the applicability of the judgments in similar cases and the interpretation of SEZ provisions and CENVAT Credit Rules.

9. Ultimately, the Tribunal set aside the impugned order and allowed the appeal, highlighting the importance of the precedents and the specific provisions governing clearances to SEZ developers. The decision was based on a thorough analysis of the issues involved and the relevant legal framework.