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2015 (12) TMI 933 - AT - Central ExciseCenvat Credit - supply of goods to the contractor of the SEZ unit - ineligible credit availed by the appellant on the inputs/input services which were used in or in relation to the manufacture of excisable goods supplied to co-developers of SEZ and contractors who had undertaken operations in the SEZ - Held that - Rule 6 (6) of the Cenvat Credit Rules specifically provides that, the provisions of sub-rules (1), (2), (3) & (4) shall not be applicable in case the excisable goods removed without payment of duty are either cleared to a unit in a SEZ or to a developer of a SEZ for their authorised operations. Thus, the rule provides for non-reversal of credit in respect of clearances effected to unit in SEZ or to a developer of SEZ. The Rule does not refer to supplies made to contractors of a developer or contractor of a unit in SEZ. In the absence of any specific provisions, the benefit of said Rule cannot be extended to supplies made to the contractors - appellant is not entitled to the benefit of Cenvat Credit in respect of supplies made to contractors. The amount of credit availed in respect of such supplies made works out to approximately ₹ 4.89 lakhs. Thus, the appellant has not made out a case for complete waiver of pre-deposit of dues adjudged against him - Partial stay granted.
Issues Involved:
- Duty demand on ineligible credit availed by the appellant on inputs/input services used in the manufacture of excisable goods supplied to co-developers of SEZ and contractors. - Interpretation of SEZ Act and Cenvat Credit Rules regarding supplies made to co-developers and contractors. - Entitlement to Cenvat Credit benefit for supplies made to contractors of a developer. - Pre-deposit requirement and waiver of balance dues during the pendency of the appeal. Analysis: Issue 1: Duty demand on ineligible credit The appeal and stay petition challenged the duty demand of &8377; 51,47,975/- confirmed by the adjudicating authority. The demand was based on the appellant's availing of ineligible credit on inputs/input services used in the manufacture of excisable goods supplied to co-developers of SEZ and contractors. The appellant contended that the demand was not sustainable in law, citing relevant provisions of the SEZ Act and Cenvat Credit Rules. Issue 2: Interpretation of SEZ Act and Cenvat Credit Rules The appellant argued that as per Section 2 (g) of the SEZ Act and Rule 6 (6) (v) of the Cenvat Credit Rules, Cenvat Credit need not be reversed on inputs/input services used in the manufacture of excisable goods supplied to a unit in the SEZ or to the developer of an SEZ. Therefore, the demand in relation to supplies made to co-developers was deemed unjustified based on the specific provisions cited. Issue 3: Entitlement to Cenvat Credit for supplies to contractors Regarding supplies made to contractors, the appellant relied on Section 26 of the SEZ Act and Rule 10 of the SEZ Rules,2006, asserting that contractors appointed by developers or co-developers were entitled to the same concessions available to developers. However, the Revenue argued that the benefit of non-reversal of credit was limited to supplies made to units in SEZ or developers, excluding contractors. The Tribunal concurred, holding that the appellant was not entitled to the Cenvat Credit benefit for supplies made to contractors, directing a pre-deposit of the disputed amount. Issue 4: Pre-deposit requirement and waiver The Tribunal ruled that the appellant must make a pre-deposit of &8377; 4.89 lakhs, representing the credit availed on supplies made to contractors, by a specified date. Compliance with the pre-deposit would result in the waiver of the balance dues adjudged against the appellant, with recovery stayed during the appeal's pendency. This decision balanced the appellant's obligation to pre-deposit with the potential waiver of additional dues, ensuring procedural fairness during the appeal process. In conclusion, the Tribunal's judgment clarified the entitlement to Cenvat Credit benefits for supplies to co-developers and contractors under the SEZ Act and Cenvat Credit Rules, emphasizing the importance of specific legal provisions in determining eligibility. The ruling also highlighted the procedural requirement of pre-deposit and the conditions for waiver of balance dues, ensuring a balanced approach to resolving the dispute.
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