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2015 (3) TMI 955 - AT - Central ExciseAvailment of CENVAT Credit - DTA Clearances - goods cleared to SEZ developers - Non maintenance of separate accounts - Held that - Assessee had supplied goods from the domestic tariff area to a developer and it is to be treated as an export in view of sub-section 2(m) of the SEZ Act. In case it is treated to be export then all benefits as given to export under any other law should be given. - It is clear from the nature of the excise duty as it has been traditionally understood to be duty only on the manufacture of those goods that are to be consumed within the country and not on the goods to be exported. This is also framework of the Excise Act. As the supply of the goods to a developer of SEZ is treated to be export, there appears to be no reason why this benefit was not there, except that it was due to a mistake or inadvertence that the word developer was not initially included in the sub-rule 6(6)(i) of the 2004-Rules and the developers and units were not given same treatment. Appellants cleared the finished goods to SEZ developers by following ARE-I procedure prescribed under Rule (19) of CER, which is duly approved by the jurisdictional Central Excise authority and also accepted LUT executed by the appellants for this purpose. The Hon ble High Court in the 2013 (5) TMI 460 - CHATTISGARH HIGH COURT decision also held that the amendment introduced in Rule 6(6) on 31.12.2008, substituting clause (i) by adding both the units of SEZ and developers is retrospective in nature. The Hon ble High Court of Andhra Pradesh has upheld the Tribunal Order in the case of Sujana Metals vide High Court Order (2015 (3) TMI 781 - ANDHRA PRADESH HIGH COURT), dismissed the Revenue appeal. - goods cleared to SEZ developers are treated as export as the appellants followed ARE-I provision. The amended provisions of Rule 6 (6) is applicable retrospectively as held by the Hon ble High Court The demand confirmed by the adjudicating authority is not sustainable. Accordingly, we set aside the impugned order - Decided in favour of assessee.
Issues Involved:
1. Demand of an amount equivalent to 10% of the transaction value of goods cleared to SEZ developers. 2. Applicability of Rule 6(6) of Cenvat Credit Rules (CCR), 2004. 3. Retrospective effect of the amendment introduced in Rule 6(6) by Notification No. 50/2008-NT dated 31.12.2008. Issue-wise Detailed Analysis: 1. Demand of an amount equivalent to 10% of the transaction value of goods cleared to SEZ developers: The appellants, manufacturers of Aluminium Composite Panels with Glass, cleared their final products to Domestic Tariff Area (DTA) on payment of excise duty and to SEZ developers without payment of duty by following ARE-I procedures. A Show Cause Notice dated 22.01.2009 demanded an amount equivalent to 10% of the transaction value on goods cleared to SEZ developers for the period June 2008 to December 2008, alleging non-maintenance of separate accounts as per Rule 6(2) of Cenvat Credit Rules. The adjudicating authority confirmed a demand of Rs. 71,94,674/- along with interest. 2. Applicability of Rule 6(6) of Cenvat Credit Rules (CCR), 2004: The appellants argued that clearances to SEZ developers are deemed exports as per Board's Circular No. 29/2006-Cus dated 27.12.2006 and are covered by Rule 6(6) of CCR, 2004. They contended that they followed the procedures under Rule 19 of CER, 2002, and submitted a Letter of Undertaking (LUT) dated 11.01.2008, accepted by the jurisdictional Dy. Commissioner. The Revenue countered that Rule 6(6)(i) of CCR excluded only SEZ units and not developers during the relevant period, and the appellants did not maintain separate accounts for inputs used in both dutiable and exempted goods. 3. Retrospective effect of the amendment introduced in Rule 6(6) by Notification No. 50/2008-NT dated 31.12.2008: The appellants claimed that the amendment adding SEZ developers to Rule 6(6)(i) is retrospective. They cited several case laws, including Sujana Metal Products Ltd. Vs. CCE, Hyderabad, and UOI Vs. Steel Authority of India Ltd., where courts held that goods supplied to SEZ developers are treated as exports. The Revenue argued that the amendment is prospective and relied on case laws supporting their stance. Tribunal's Findings: The Tribunal noted that the appellants cleared goods to SEZ developers by following ARE-I procedures, which are treated as exports. The Tribunal referenced the case of Sujana Metal Products Limited and the Hon'ble High Court of Chhattisgarh in UOI Vs. Steel Authority of India Ltd., which held that goods supplied to SEZ developers are to be treated as exports under Section 2(m) of the SEZ Act. The Tribunal emphasized that the SEZ Act treats units and developers equally, and the amendment to Rule 6(6)(i) corrects an inadvertent omission, making it retrospective to avoid discrimination. Conclusion: The Tribunal ruled that the goods cleared to SEZ developers are treated as exports, and the amended provisions of Rule 6(6) are applicable retrospectively. The demand confirmed by the adjudicating authority was deemed unsustainable. Consequently, the Tribunal set aside the impugned order and allowed the appeals filed by the appellants with consequential benefits. Order Pronounced: (Order pronounced in the Open Court on 06.08.2014)
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