2017 (12) TMI 1215 - AT - Central Excise

Intermediate goods - benefit of N/N. 67/95 - clearance of intermediate products viz. Acetic Acid, Ethyl Acetate and Anhydride cleared by the appellants to a unit situated in the SEZ without payment of duty in terms of Rule 30 of SEZ Rules, 2005 - Held that - the issue is no longer res integra and has been settled in favour of the appellant in their own case Trichy Distilleries & Chemicals Ltd. Versus Commissioner of Central Excise, Trichy 2017 (12) TMI 1133 - CESTAT CHENNAI , where it was held that the appellants are very much entitled to the benefit of N/N. 67/95-CE in respect of intermediate goods used to manufacture final products which were supplied to a SEZ unit - appeal allowed - decided in favor of appellant.

Summary

Issues:
Clearance of intermediate products to SEZ without payment of duty under SEZ Rules, 2005.

Analysis:
The dispute in the appeals revolves around the clearance of intermediate products to a unit in the Special Economic Zone (SEZ) without duty payment under Rule 30 of SEZ Rules, 2005. The Department contended that the appellants are not exempt from discharging their duty liability on these clearances, despite Notification No.67/95 granting exemption to intermediate products from duty payment. Orders-in-Original were issued demanding duty liability, interest, and penalties. The Commissioner (Appeals) upheld these orders, leading the appellants to appeal before the Tribunal.

During the hearing, the appellant's consultant highlighted that the issue had been previously settled in favor of the appellant in a Tribunal Final Order dated 27.10.2017. The consultant argued that supplies made to SEZ by a DTA unit are not chargeable to nil rate of duty or exempt from duty under an exemption notification, thus not qualifying as exempt goods under Rule 2(d) of Cenvat Credit Rules, 2004.

Upon reviewing the facts, the Tribunal found merit in the consultant's argument, citing the Tribunal's previous decision that supplies to SEZ Developers without duty payment are to be treated as exports under the SEZ Act, 2005. As such, these supplies cannot be considered exempted goods and do not fall under the provisions of Rule 6 of the Cenvat Credit Rules, 2004. The Tribunal's decision in similar cases supported the appellant's entitlement to the benefit of Notification No.67/95-CE for intermediate goods used in manufacturing final products supplied to a SEZ unit.

Based on the precedent set by previous decisions, the Tribunal ruled in favor of the appellants, setting aside the impugned orders and allowing the appeals with consequential relief as per law. The Tribunal's decision emphasized the classification of supplies to SEZ as exports under the SEZ Act, leading to the appellants' eligibility for the duty exemption under Notification No.67/95-CE.