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2024 (5) TMI 189 - AT - Central ExciseCENVAT Credit - requirement to pay 10% of the value of the excisable goods cleared to a SEZ developer in terms of Rule 6(3)(i) of CENVAT Credit Rules, 2004 - non-maintenance of separate records - HELD THAT - There is no dispute about the fact that during the disputed period, the appellant had cleared furnitures against ARE-1 and raised proper invoices to SEZ developers without payment of duty. It is found that applicability of Rule 6(2) of the CENVAT Credit Rules, 2004 for clearances to SEZ developers is no more res integra being covered by the judgment of the Hon ble Karnataka High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX AND THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S FOSROC CHEMICALS (INDIA) PVT LTD AND OTHERS 2014 (9) TMI 633 - KARNATAKA HIGH COURT . Interpreting Rule 6 of the CENVAT Credit Rules, 2004 in the context of Notification No.50/2008-CE(NT) dt. 31.12.2008 whereby the earlier Rule 6(6)(i) has been amended as cleared to a unit in a special economic zone or to a developer of a special economic zone for their authorised operations w.e.f. 31.12.2008 held that the same is retrospective operation. The said judgment has been followed by the jurisdictional High Court in subsequent judgments COMMISSIONER OF C. EX., BANGALORE-III VERSUS ELINS SWITCH BOARDS PVT. LTD. 2014 (10) TMI 1066 - KARNATAKA HIGH COURT and COMMISSIONER OF CENTRAL EXCISE BANGALORE-III, VERSUS M/S. LOTUS POWER GEARS (P) LTD. 2016 (6) TMI 998 - KARNATAKA HIGH COURT . In Lotus Power Gears s case, the Hon ble High Court further observed that the judgment of the jurisdictional High Court is to be followed even a SLP has been filed before the Hon ble Supreme Court against the earlier judgment as there is no stay granted by the Hon ble Supreme Court. The impugned order is set aside - Appeal allowed.
Issues Involved: Appeal against Order-in-Original regarding duty payment for excisable goods cleared to SEZ developers without maintaining separate accounts.
Issue 1: Applicability of Rule 6(2) of CENVAT Credit Rules, 2004 The appellant cleared excisable goods to SEZ developers without paying duty and not maintaining separate accounts for inputs used in such clearances, leading to a demand notice. The appellant argued that they followed prescribed procedures, filed necessary returns, and the demand for the period prior to 15.12.2009 is time-barred. They cited precedents and the retrospective nature of Rule 6(6)(i) post-amendment. The Tribunal referred to judgments by Karnataka High Court and upheld that clearances to SEZ developers fall within the scope of Rule 6(6)(i), emphasizing the retrospective operation of the amendment. The Tribunal also highlighted the overriding effect of Section 151 of SEZ Act, 2005 on all other laws, supporting the appellant's contentions. The impugned order was set aside, and the appeal was allowed. Conclusion: The Tribunal ruled in favor of the appellant, emphasizing the retrospective applicability of Rule 6(6)(i) of CENVAT Credit Rules, 2004 for clearances to SEZ developers. The judgment highlighted the overriding effect of Section 151 of SEZ Act, 2005 on other laws, supporting the appellant's arguments and setting aside the demand raised by the Revenue.
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