2013 (1) TMI 500 - AT - Central Excise

Goods supplied to SEZ - Whether goods supplies to SEZ Developers without payment of duty are to be treated as exempted goods under Rule 2(d) of the CCR, 2004 - Whether supplies to SEZ, the provision of sub-rule (2) and (3) of Rule 6 would be applicable - Held that - The overriding provisions of 51 of SEZ Act, supplies to SEZ as well as to SEZ Developers by a DTA unit would have been treated on exports for the purpose of CCR, 2004. Since the supplies to SEZ Developers are export, the same cannot be treated as exempted goods and hence the Provisions of sub-rule (1), (2) & (3) of the Rule 6 of the CCR, 2004 would not be applicable. In favour of assessee

Summary

Issues:
1. Whether goods supplied to SEZ Developers without payment of duty are to be treated as "exempted goods" under the Cenvat Credit Rules, 2004.
2. Applicability of Rule 6(3)(b) of the Cenvat Credit Rules, 2004 on supplies to SEZ Developers.
3. Interpretation of the term "export" in the context of supplies to SEZ Developers.
4. Effect of Section 51 of the SEZ Act on the treatment of supplies to SEZ Developers.

Analysis:
1. The appellant, engaged in manufacturing M.S. Pipes and Tubes, availed Cenvat Credit for duty paid on inputs. The dispute arose when the Department considered goods supplied to SEZ Developers as "exempted goods" due to lack of separate accounts for dutiable and exempted final products. The Show Cause Notice demanded recovery based on Rule 6(3)(b) of the Cenvat Credit Rules, 2004. The Joint Commissioner upheld the demand, which was partially upheld by the Commissioner (Appeals).

2. The appellant argued that supplies to SEZ Developers should not be considered "exempted goods" as they are treated as exports under the SEZ Act, 2005. Citing legal precedents, the appellant contended that Rule 6(6) of the Cenvat Credit Rules applies, exempting supplies to SEZ Developers from the provisions of Rule 6(1), (2), and (3). The Tribunal's previous rulings supported this argument.

3. The Department Representative maintained that supplies to SEZ Developers were not covered by Rule 6(6) before 31-12-2008 and should be treated as "exempted goods." Deemed exports were distinguished from actual exports, and it was argued that duty should be paid on goods supplied to SEZ Developers.

4. The Tribunal analyzed the definition of "exempted goods" under Rule 2(d) of the Cenvat Credit Rules and the treatment of supplies to SEZ Developers as exports under the SEZ Act. Section 51 of the SEZ Act was deemed overriding, leading to the conclusion that supplies to SEZ Developers should be treated as exports, not "exempted goods." Relying on legal interpretations and precedents, the Tribunal set aside the impugned order, allowing the appeal.

Conclusion:
The Tribunal ruled in favor of the appellant, holding that goods supplied to SEZ Developers without payment of duty should not be treated as "exempted goods" under the Cenvat Credit Rules, 2004. The provisions of Rule 6(1), (2), and (3) were deemed inapplicable to such supplies, considering them as exports under the SEZ Act. The impugned order was set aside, and the appeal was allowed.