2023 (9) TMI 59 - AT - Central Excise

CENVAT Credit - supplies made to SEZ by DTA unit, specially to SEZ developers - credit denied to the supplier under Rule 6 (6) of the Cenvat Credit Rules, 2004 on the ground that during the material time no exemption was available to the appellant - HELD THAT - Notification No. 50/2008-CE (NT) specifically provided benefit to SEZ, came into existence only on 31.12.2008 and there was no way having its retrospective application - Other issues regarding export and all have also been elaborated by Commissioner (Appeals). There are no merit in the appeal - appeal dismissed.

Summary

Issues Involved:
1. Denial of Cenvat credit for supplies made to SEZ developers by DTA units.
2. Retrospective applicability of Notification No. 50/2008-CE(NT).
3. Whether supplies to SEZ developers constitute "export" under bond.

Summary:

1. Denial of Cenvat credit for supplies made to SEZ developers by DTA units:
The department sought to deny Cenvat credit to the supplier u/r 6(6) of the Cenvat Credit Rules, 2004, arguing that no exemption was available to the appellant during the material time, and they were required to reverse the credit for supplies made to SEZ developers. The Commissioner (Appeals) emphasized that prior to 31.12.2008, Rule 6(6)(1) stated that sub-rules (2), (3), and (4) would not apply to excisable goods removed without payment of duty to a unit in a SEZ. This rule was amended via Notification No. 50/2008-CE(NT) dated 31.12.2008 to include SEZ developers.

2. Retrospective applicability of Notification No. 50/2008-CE(NT):
The Tribunal held that the benefit under Rule 6(6) of the Cenvat Credit Rules, 2004, extended to supplies to SEZ developers only from 31.12.2008 and not retrospectively. The appellant's reliance on the Sujana Metal Products Ltd case, which held the amendment to be retrospective, was rejected. The Tribunal found that the amendment was substantive and not clarificatory, and thus, had only prospective effect. The Tribunal also referred to various judgments, including WPIL Ltd and Indian Tobacco Association, to support its decision that the amendment was not retrospective.

3. Whether supplies to SEZ developers constitute "export" under bond:
The appellant contended that supplies to SEZ developers should be considered as "export" under bond and thus covered under clause (v) of Rule 6(6) of CCR. The Tribunal rejected this argument, relying on the Gujarat High Court's decision in Essar Steel Ltd, which clarified that the term "export" under the Customs Act cannot be applied to the SEZ Act. The Tribunal also cited other judgments, including Shyamaraju & Co. India P Ltd and Biocon Limited, to support its view that the definition of "export" under the SEZ Act cannot be adopted for the Cenvat Credit Rules. The Tribunal concluded that the supplies to SEZ developers do not constitute "export" under bond and are not covered under clause (v) of Rule 6(6) of CCR.

Conclusion:
The Tribunal upheld the order of the Commissioner (Appeals), finding no merit in the appeal. The denial of Cenvat credit availed for supplies to SEZ developers prior to 31.12.2008 was deemed legally maintainable. The appeal was dismissed.