2019 (5) TMI 1017 - AT - Central Excise

100% EOU - Refund claim - supplies made by them from their 100% EOU to a unit in the SEZ - export of goods/deemed exports - case of the revenue is that Rule 5 of CCR, 2004 provides for refund of Cenvat Credit when the goods are exported - HELD THAT - Rule 5 of CCR, 2004 specifically indicates what export goods would mean and it requires such goods to be exported out of India . However, the question is what is exported out of India would mean. In the normal cases, India includes the territorial waters of India and the export requires goods to be moved to a place outside territorial waters of India. As far as SEZs are concerned, the definition of DTA under SEZ Act includes everything located outside SEZs. Therefore, 100% EOU located outside SEZ, constitutes DTA as far as SEZ Act is concerned. Sec.51 of SEZ Act also makes it clear that this Act prevails over any other law. It has also been clarified by the CBEC in their Circular dated 20.04.2015 (supra) that refund of accumulated Cenvat Credit is available when goods are cleared from DTA to SEZ. The appellant was eligible for refund of accumulated Cenvat Credit under Rule 5 of CCR, 2004 - Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Interpretation of Rule 5 of Cenvat Credit Rules (CCR), 2004 regarding refund eligibility for exports and supplies to Special Economic Zones (SEZs).
2. Determining whether supplies made by a 100% Export Oriented Unit (EOU) to SEZ units qualify as exports under Rule 5 of CCR, 2004.
3. Application and precedence of SEZ Act, 2005 in relation to exports to SEZs.
4. Consideration of Circular No. 1001/8/2015-CX and relevant case laws for refund eligibility.

Detailed Analysis:
1. The case involved the interpretation of Rule 5 of CCR, 2004 concerning refund eligibility for exports and supplies to SEZs. The appellant, a 100% EOU, exported bulk drugs and supplied some to SEZs, seeking a refund of input credit. The revenue contended that goods supplied to SEZs cannot be considered exports as per Rule 5, as they are sold within India. The appellant argued that SEZ Act, 2005 defines exports from SEZs differently, making supplies to SEZs eligible for refund under Rule 5.

2. The key issue was whether supplies by a 100% EOU to SEZ units qualify as exports under Rule 5 of CCR, 2004. The department argued against refund eligibility, citing the explanation under Rule 5. The appellant relied on the SEZ Act, which deems supplies to SEZs as exports. The Circular No. 1001/8/2015-CX and case laws supported the appellant's claim for refund eligibility for supplies to SEZ units.

3. The application and precedence of SEZ Act, 2005 in relation to exports to SEZs were crucial in determining refund eligibility. The appellant argued that once goods are supplied to SEZs, SEZ Act provisions prevail over other laws, making such supplies qualify as exports. The SEZ Act's definition of Domestic Tariff Area (DTA) and SEZ units supported the appellant's claim for refund under Rule 5.

4. The consideration of Circular No. 1001/8/2015-CX and relevant case laws, including Orbis India Pvt Ltd and Sirmaxo Chemicals Pvt Ltd, played a significant role in establishing the appellant's entitlement to refund under Rule 5. The Circular clarified that goods cleared from DTA to SEZ qualify as exports, supporting the appellant's position. The judgment relied on the precedent set by CESTAT-Chennai in Orbis India Pvt Ltd case, granting refund eligibility for supplies to SEZ units.