2013 (12) TMI 689 - AT - Central Excise

Goods cleared to SEZ developer No separate accounts maintained - Demand as per Rule 6(3)(b) of Cenvat credit Rules, 2004 - Waiver of Pre-deposit Held that - The goods cleared to SEZ developer cannot be considered as exempted final products as they should be considered to have been exported - Following Sujana Metals Products Ltd. and Ors. vs. CCE, Hyderabad 2011 (9) TMI 724 - CESTAT, BANGALORE - the appellant has made out prima facie case against the demand and associated penalties pre-deposits waived till the disposal Stay granted.

Summary

Issues:
Waiver of pre-deposit and stay of recovery in relation to demand raised under Rule 6(3)(b) of the CENVAT Credit Rules, 2004.

Analysis:
The appellant sought waiver of pre-deposit and stay of recovery concerning a demand of Rs.26,44,431/- under Rule 6(3)(b) of the CENVAT Credit Rules, 2004. The demand was based on the contention that goods cleared to SEZ developer were considered exempted goods, leading to the requirement of paying 10% of the value of these goods. However, upon reviewing the records and hearing both parties, it was determined that the goods cleared to SEZ developer should not be classified as exempted goods but rather as exported goods, as established in a previous case by the bench. Consequently, the appellant was found to have a prima facie case against the impugned demand and penalties. Therefore, the tribunal granted waiver of pre-deposit and stay of recovery for the adjudged dues.

This judgment highlights the importance of maintaining separate accounts for common inputs and input services used in the manufacturing process of different types of products. Failure to maintain such records can lead to misunderstandings regarding the classification of goods and subsequent demands for payment. The decision also emphasizes the significance of legal precedent in determining the proper classification of goods, as demonstrated by referring to a previous case where a similar issue was resolved differently. Overall, the judgment provides clarity on the treatment of goods cleared to SEZ developers and the necessity of establishing a prima facie case to support requests for waiver of pre-deposit and stay of recovery in such situations.