2012 (12) TMI 99 - AT - Central Excise

Whether goods procured duty free from DTA by a DTA unit for manufacture of finished goods when cleared to a unit in SEZ shall amount to export Held that - Clarification issued by Board vide Circular No. 29/2006-Cus., dated 27-12-2006 clarifying that section 2(m) of SEZ Act, 2005 envisages that supply of goods or providing services, from DTA to a SEZ unit or SEZ developer shall constitute export - supply of goods to buyers who had further supplied the same to SEZ have to be held as eligible exempted clearances in terms of Rule 19(2) read with Notification No. 43/2001-C.E. (N.T.) in favor of assessee

Summary

Issues:
Confirmation of duty against the appellant for billets cleared without payment of duty, Interpretation of Rule 19(2) of Central Excise Rules, 2002 regarding clearances to SEZ, Dispute on whether clearances to SEZ amount to export, Tribunal's decision in favor of the assessee in a similar case, Commissioner's decision in favor of another buyer supplying to SEZ, Settlement of the issue at the buyer's end, Lack of challenge by Revenue on Commissioner's decision, Disposal of appeal in favor of the appellant.

Analysis:

The judgment by the Appellate Tribunal CESTAT, New Delhi dealt with the confirmation of duty amounting to Rs. 1,56,58,132 against the appellant for billets cleared without payment of duty to three parties during a specific period. The clearances were made under Rule 19(2) of Central Excise Rules, 2002 in conjunction with Notification No. 43/2001-C.E. (N.T.). The Revenue contended that clearances to SEZ cannot be considered as exports under Rule 19(2), leading to the initiation of proceedings against the appellant.

The Tribunal noted that the clearances were based on permission letters issued by the buyers, and proceedings were initiated against one buyer for cancellation of the letter. The adjudicating authority initially ruled against the assessee, stating that clearances to SEZ do not equate to exports. However, the Commissioner (Appeals) ruled in favor of the assessee, prompting the Revenue to appeal to the Tribunal. Notably, the Tribunal had previously ruled in favor of the assessee in a similar case involving one of the appellant's buyers, M/s. Shri Bajrang Alloys Ltd., equating goods supplied to SEZ with exports.

The Tribunal emphasized that the supply of goods to SEZ should be considered as exports, settling the issue at the buyer's end. Additionally, in the case of Shri Bajrang Metallics and Power Ltd., the Commissioner had held that supply of goods to buyers further supplying to SEZ qualifies as exempted clearances under Rule 19(2) and Notification No. 43/2001-C.E. (N.T.). Since the Revenue did not challenge the Commissioner's decision and considering the settled issue up to the Tribunal level in a similar case, the Tribunal found no grounds in the present appeal favoring the Revenue.

Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant. The stay petition and appeal were disposed of accordingly, along with a miscellaneous application. The cross objection filed by the Revenue in the form of written submission was also addressed and disposed of by the Tribunal.