2016 (2) TMI 199 - AT - Central Excise

CENVAT credit - whether supplies made to SEZ Developer for the period prior to 31.12.2008 will attract the provisions of Rule 6(6) of the Cenvat Credit Rules or not? - whether the appellant is liable to pay 10% of the value of the goods supplied to SEZ Developer in case no separate accounts have been maintained in respect of dutiable goods and goods supplied without payment of duty? - Held that - The very same issue was considered in Sujana Metal Products Ltd. vs. CCE, Hyderabad 2009 (5) TMI 643 - CESTAT, BANGALORE wherein held that for the period upto 09/02/2006, the supplies made to SEZ units are to be treated as export both for extending export benefits and for levy of duty in terms of SEZ provisions contained in Chapter XA of the Customs Act. For the period from 10/02/2006, the definition of the term export under the Customs Act is not consistent with the definition of the term export under the SEZ Act. However, the definition of the term export under the SEZ Act shall prevail over the definition of term export under the Customs Act. Therefore, supplies made to SEZ from DTA units shall be treated as export. Since both during the period prior to and w.e.f 10/02/2006, the supplies made to SEZ are held to be export . The application of provisions of Cenvat Credit Rules for recovery of amounts on goods supplied to SEZ units in terms of Rule 6 of CCR, 2002/CCR, 2004 does not arise. - Decided in favour of assessee

Summary

Issues:
- Appeal against order-in-appeal upholding order-in-original
- Whether supplies to SEZ Developer attract Rule 6(6) of Cenvat Credit Rules
- Liability to pay 10% of value of goods supplied without separate accounts

Analysis:
The appellant, engaged in manufacturing excisable goods, received orders from an SEZ company for supply of steel items. The SEZ company certified its SEZ status, and the appellant declared the clearances as exports at nil duty rate. However, a show cause notice was issued demanding payment under Rule 6(3)(b) of Cenvat Credit Rules. The demand was confirmed by the adjudicating authority and upheld by the Commissioner (Appeals), leading to the present appeal.

The appellant relied on various case laws to support their argument for setting aside the order-in-appeal. The Revenue, represented by the learned AR, supported the lower authorities' findings. The Tribunal considered whether supplies to SEZ Developer before 31.12.2008 attract Rule 6(6) of Cenvat Credit Rules and if the appellant is liable to pay 10% of the value of goods supplied without separate accounts.

Referring to previous judgments, the Tribunal concluded that supplies to SEZ units are to be treated as exports, exempting them from the provisions of Cenvat Credit Rules. The Tribunal held that the appellant's case aligns with the cited judgment, setting aside the impugned order and allowing the appeal with any consequential relief.

The judgment, pronounced on 22.12.2015 by MR. S.S. GARG, MEMBER (JUDICIAL), favored the appellant based on the interpretation of relevant legal provisions and precedents, providing clarity on the treatment of supplies to SEZ entities under the Cenvat Credit Rules.