2017 (11) TMI 6 - AT - Central Excise

Benefit of N/N. 67/1995-CE dated 16.03.1995 - captive consumption of clinker captively consumed in manufacture of Cement, cleared to SEZ units - Revenue entertained the view that since such cement is exempted from payment of Central Excise duty, the exemption for captively consumed clinker in terms of the above Notification is not available - Held that - Tribunal in large number of appeals in identical set of facts has held that the clearances made to SEZ Units in terms of Rule 19 of Central Excise Rules are not to be considered as exempted clearances and such clearances will not bar the exemption available to captively consumed clinker under N/N. 67/95 - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility for exemption under Notification No.67/1995-CE for clinker captively consumed in the manufacture of cement cleared to units in SEZ.
2. Interpretation of clearances to SEZ units in terms of Rule 19 of Central Excise Rules, 2002.
3. Applicability of Board Circular dated 28.04.2015 on supplies made to SEZ units.

Detailed Analysis:

Issue 1:
The appeal challenged the order passed by the Commissioner of Central Excise, Jaipur, regarding the eligibility of the appellant for exemption under Notification No.67/1995-CE for clinker captively consumed in the manufacture of cement cleared to units in SEZ. The Revenue contended that since the cement cleared to SEZ units was exempt from Central Excise duty, the exemption for captively consumed clinker under the same Notification was not available. The original authority upheld this view, leading to a demand for Central Excise Duty and imposition of a penalty. The appellant argued that the clearances to SEZ units were not exempted and should be considered at par with exports, making denial of exemption for captively consumed clinker unjustifiable. The Tribunal referred to a previous decision where it was held that clearances to SEZ units under Rule 19 of Central Excise Rules are not to be considered as exempted, allowing the exemption for captively consumed clinker under Notification No.67/1995-CE.

Issue 2:
The Tribunal examined the procedure followed by the appellant for clearances to SEZ units under Rule 30 of the SEZ Rules, 2005 and Rule 19 of the Central Excise Rules, 2002, which included executing bonds and presenting ARE-1. The Tribunal confirmed that the appellant adhered to the required procedure, and based on a previous decision and a Board Circular, determined that supplies to SEZ units constituted exports, and no duty could be levied on clinker used in the manufacture of cement cleared to SEZ units under Rule 19 of Central Excise Rules, 2002.

Issue 3:
In light of the Tribunal's analysis and the precedents cited, it was concluded that the appellants were indeed eligible for exemption under Notification No.67/1995-CE for clinker captively consumed in the manufacture of cement cleared to SEZ Units/Developers without payment of duty, both before and after the amendment of the SEZ Act. The Tribunal found that the impugned order was without merit and set it aside, allowing the appeal in favor of the appellant.