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2018 (11) TMI 1727 - AT - Central ExciseCENVAT Credit - exempt goods or not - removal of goods made by the assessee to the SEZ Developers - Since the respondent did not maintain separate records as provided under Rule 6(2) of the Cenvat Credit Rules, 2004 and did not pay the amount equal to 10% of value of the exempted goods in terms of Rule 6(3) ibid - retrospective application of sub-rule (6) of Rule 6 of the Cenvat Credit Rules, 2004 vide Notification No.50/08-C.E. (N.T.) dated 31.12.2008 - HELD THAT - Rule 6 of the Cenvat Credit Rules, 2004 deals with the situation of manufacture of dutiable as well as exempted goods - sub-rule (5) of Rule 6 ibid provided that the embargo created in sub-rule (1), subrule (2) and sub-rule (3) shall not be applicable, in case the goods are cleared to a unit in the Special Economic Zone. The said sub-rule (5) of Rule 6 was substituted by Notification No.50/08-C.E. (N.T.) dated 31.12.2008, wherein sub-rule (5) was renumbered as sub-rule (6). The effect of the amendment was that the developer of Special Economic Zone was inserted. Whether such amendment by way of substitution of Rule 6 would be applicable with retrospective effect or the same will be considered having prospective effect? - HELD THAT - By considering the provisions contained in SEZ Act and the Rules, various judicial forums have held that the amendment made in Rule 6(6)(i) in 2008 has to be construed as retrospective in nature and the benefit of amendment should be extended to the goods cleared to a developer of SEZ for the authorized operations. There is no infirmity in the impugned order passed by the learned adjudicating authority - appeal dismissed - decided against Revenue.
Issues:
- Whether the goods supplied to SEZ developers can be equated with exports? - Whether the provisions of Rule 6 of the Cenvat Credit Rules, 2004 are applicable for goods supplied to SEZ developers? - Whether the amendment in Rule 6(6)(i) of the Cenvat Credit Rules, 2004 should be retrospectively applied to supply of goods to SEZ developers? Analysis: Issue 1: The respondent cleared finished goods to SEZ developers under ARE-1 without payment of duty based on a letter of undertaking. The Revenue contended that these goods cannot be equated with exports. However, the adjudicating authority held that the goods cleared to SEZ developers are considered exported goods under the SEZ Act, exempting the respondent from certain provisions of Rule 6. Issue 2: The Revenue argued that Rule 6 provisions, including maintenance of separate records and payment of 10% of value of exempted goods, should apply to goods supplied to SEZ developers. The respondent, on the other hand, relied on the exemption provided under Rule 6(6) for goods cleared to SEZ developers, supported by judicial precedents. Issue 3: The key contention was whether the amendment in Rule 6(6)(i) of the Cenvat Credit Rules, 2004, introduced through Notification No.50/08-C.E. (N.T.) dated 31.12.2008, should be applied retrospectively to goods supplied to SEZ developers. The respondent argued for retrospective application, citing various judgments supporting this interpretation. The Tribunal analyzed Rule 6 of the Cenvat Credit Rules, emphasizing the exemption under sub-rule (5) (later renumbered as sub-rule 6) for goods cleared to SEZ units. The amendment in 2008 extended this exemption to SEZ developers. Relying on judicial precedents, the Tribunal concluded that the amendment should be construed as retrospective, benefiting goods supplied to SEZ developers. As a result, the impugned order dropping the show cause notice was upheld, dismissing the Revenue's appeal. In conclusion, the Tribunal's decision was based on the interpretation of Rule 6 provisions in light of the SEZ Act and relevant judicial precedents, supporting the respondent's position on the applicability of the exemption to goods supplied to SEZ developers.
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