2013 (2) TMI 165 - AT - Central Excise

Clearance made to SEZ - Export of dutiable goods - Rule 3(5) of the CENVAT Credit Rules, 2004 - Assessee has cleared inputs and capital goods to a unit in SEZ - Clearance to be treated as dutiable goods or exempted goods - Held that - Following the decision in case of SUJANA METAL PRODUCTS LTD.(2011 (9) TMI 724 - CESTAT, BANGALORE) that the assessee for the clearance of the input or capital goods to an SEZ are to be treated as export of dutiable goods. Therefore, they are not liable to reverse the CENVAT credit. In favour of revenue

Summary

Issues:
Clearance of inputs and capital goods to SEZ without reversal of input credit under CENVAT Credit Rules 2004.

Analysis:
The issue at hand involves the clearance of inputs and capital goods to a unit in SEZ without reversing the input credit taken by the respondents under the CENVAT Credit Rules 2004. The lower appellate authority, relying on the decision in Sujana Metal Products Ltd., held that such clearances to SEZ should be treated as exports of dutiable goods, thereby exempting the respondents from the obligation to reverse the CENVAT credit. The Revenue, dissatisfied with this decision, appealed before the Tribunal.

Upon hearing both sides and considering the arguments presented, the Tribunal delved into the legal framework and precedents. The Revenue relied on the decisions in Essar Ltd. and Tirupati Udyog Ltd., emphasizing the requirement under Rule 3(5) of the CENVAT Credit Rules 2004 for the respondents to reverse the CENVAT credit on clearances to SEZ. However, the Tribunal noted that in the case of Sujana Metal Products, it was established that clearances to SEZ should indeed be treated as exports, aligning with the decision in Essar Ltd.

In light of the precedent set by the Tribunal in Sujana Metal Products and considering the legal provisions, the Tribunal upheld the lower appellate authority's decision. It affirmed that the clearances of inputs and capital goods to SEZ are to be regarded as exports of dutiable goods, thereby relieving the respondents from the obligation to reverse the CENVAT credit. Consequently, the Tribunal found no fault in the lower authority's order and dismissed the appeal filed by the Revenue.

This judgment not only clarifies the treatment of clearances to SEZ under the CENVAT Credit Rules 2004 but also underscores the significance of precedent and legal interpretation in resolving disputes related to the reversal of input credit in such scenarios.