2019 (11) TMI 303 - AT - Central Excise

Refund of Central Excise Duty - supply of goods from Domestic Tariff Area (DTA) to SEZ - section 11B of the Central Excise Act - HELD THAT - The appellant, a developer of SEZ unit has procured goods from a DTA unit which he could have also procured without payment of excise duty if he had followed the appropriate procedure prescribed under SEZ Act and Rules. SEZ area is treated for all practical purposes as a place outside India. For this reason, goods which are imported into SEZ are not subject to customs duties. Goods from DTA which are supplied to SEZ units are treated at par with exports. In fact, documents such as ARE-1 and Bill of Export which are usually filed in case of exports are also filed in case of SEZ units. In case of actual exports, Central Excise Act provides for two options viz., (1) Export under Bond under Rule 19 and (2) Export under claim for rebate under Rule 18 of Central Excise Rules, 2002. The SEZ Rules, however, have only provided a mechanism for clearance of goods under bond. There is no mechanism under SEZ Rules for claiming rebate/refund on goods procured from the DTA. In the absence of any specific provision for exemption by way of refund in the SEZ Rules or under Central Excise Rules, the appellant is not entitled to refund of the duty - The assessee is not entitled to refund at all in the present case, both on account of lack of explicit provision for such refund as well as on the ground that the assessments were not challenged by the appellant. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Entitlement to refund of excise duty under SEZ Act and Rules.
2. Procedure for claiming exemption from excise duty for SEZ units.
3. Jurisdiction of the Central Excise Officer for processing refund claims.
4. Requirement to challenge the assessment of duty for claiming a refund.
5. Applicability of the Supreme Court judgments on refund claims.

Issue-wise Detailed Analysis:

1. Entitlement to Refund of Excise Duty Under SEZ Act and Rules:
The appellant, a co-developer of a Multi-Product Special Economic Zone (SEZ) in Gujarat, procured goods from a Domestic Tariff Area (DTA) supplier, paying appropriate excise duty. They claimed that under the SEZ Act, 2005, specifically sections 7 and 26, they were entitled to procure goods without any duty or tax liability. The SEZ Act provides a self-contained code for claiming exemptions, and the appellant argued that they should not have paid excise duty and thus filed for a refund under section 11B of the Central Excise Act. However, the Tribunal found that there is no specific provision under SEZ Rules or Central Excise Rules for claiming a refund of duty for goods procured from DTA, thus rejecting the appellant’s claim.

2. Procedure for Claiming Exemption from Excise Duty for SEZ Units:
The appellant contended that the SEZ Rules allow for the procurement of goods without paying duty if the proper procedure, including filing a Bill of Export and maintaining appropriate accounts, is followed. They argued that they had procured the goods on a commercial invoice basis, and the supplier paid the duty. The Tribunal noted that SEZ units are treated as outside India for practical purposes, and goods supplied to SEZ units are treated on par with exports, requiring documents like ARE-1 and Bill of Export. The Tribunal emphasized that the SEZ Rules provide a mechanism for clearance under bond but do not offer a rebate/refund mechanism for goods procured from DTA.

3. Jurisdiction of the Central Excise Officer for Processing Refund Claims:
The appellant argued that the refund application should be filed with the jurisdictional Central Excise Officer in Hyderabad, where the supplier is located, rather than the SEZ unit's jurisdiction. The Tribunal did not find merit in this argument, emphasizing that the SEZ Rules require the jurisdictional Customs & Central Excise authorities to handle matters related to authorized operations under the SEZ Act.

4. Requirement to Challenge the Assessment of Duty for Claiming a Refund:
The Tribunal highlighted that the assessment of duty by the supplier was not challenged by either the supplier or the appellant. Referring to Supreme Court judgments, including Priya Blue Industries Ltd and Flock India Pvt Ltd, the Tribunal reiterated that no refund claim under section 11B can be made unless the assessment itself is challenged. The Tribunal found no evidence of such a challenge in this case, thus ruling out the possibility of a refund.

5. Applicability of the Supreme Court Judgments on Refund Claims:
The Tribunal referred to the Supreme Court judgment in the case of Dilip Kumar & Co., which mandates strict interpretation of exemption notifications, favoring the revenue in case of doubt. The Tribunal also cited the ITC Ltd case, where the Supreme Court upheld that no refund can be sanctioned unless the assessment order is appealed against. The Tribunal concluded that the appellant’s claim for a refund fails both due to the lack of explicit provisions for such a refund and the absence of a challenge to the duty assessment.

Conclusion:
The Tribunal rejected the appeals, stating that the appellant is not entitled to a refund of the excise duty paid on goods procured from the DTA, due to the lack of specific provisions in the SEZ Rules and Central Excise Rules, and the failure to challenge the duty assessment. The appeals were dismissed on both merits and jurisdictional grounds.