2016 (3) TMI 894 - AT - Central Excise

Supply to SEZ developer for their authorized office - whether can be treated as export and secondly whether demand of 10% of the value of the goods in terms of Rule 6(3)(i) is correct and legal or otherwise? - Held that - As per the Hon ble Karnataka High Court judgment in case of Fosroc Chemicals(India) Pvt. Ltd. (2014 (9) TMI 633 - KARNATAKA HIGH COURT), the issue is settled that even prior to amendment Notification No. 50/2008-CE(N.T.) the supplies made to SEZ Developer has been treated as export and accordingly manufacturer/supplier need not to pay 10% in terms of Rule 6(3)(i) of CCR,2004

Summary

Issues involved:
1. Whether the supply to SEZ developer for their authorized office can be treated as export.
2. Whether the demand of 10% of the value of the goods in terms of Rule 6(3)(i) is correct and legal.

Analysis:

Issue 1:
The first issue in this case revolves around determining whether the supply to SEZ developers should be considered as export. The Commissioner (Appeals) allowed the appeal of the Respondent, leading to the Revenue's appeal. The Tribunal considered various circulars and statutory provisions to make a decision. The Tribunal found that the supplies to SEZ developers should be treated as export even before the amendment notification No. 50/2008. The Tribunal relied on Board Circulars and statutory interpretations to support this conclusion. The Tribunal highlighted that all clearances without payment of duty from DTA to SEZ developers were permissible under Rule 19 of the Central Excise Rules, 2002. The Tribunal emphasized that the demand of 10% of the value of goods, as made by the adjudicating authority, was not valid. The Tribunal upheld the impugned order, citing precedents and circulars that supported the treatment of such supplies as exports.

Issue 2:
The second issue concerns the legality of the demand of 10% of the value of goods under Rule 6(3)(i). The Tribunal analyzed the relevant rules and circulars to conclude that the demand made by the adjudicating authority was not justified. The Tribunal referred to Circulars issued by the Board, which are binding on departmental officers, to support its decision. The Tribunal highlighted that the demand of 10% of the value of goods failed in light of the provisions under Rule 6(6)(v) and Rule 19 of the Central Excise Rules, 2002. The Tribunal also considered the judgment of the Hon'ble Karnataka High Court in a similar case, which supported the position that supplies to SEZ developers should be treated as exports even before the amendment in Notification No. 50/2008. Therefore, the Tribunal dismissed the Revenue's appeal and upheld the impugned order.

This detailed analysis of the judgment showcases the Tribunal's thorough consideration of the issues at hand, its reliance on legal provisions and precedents, and its ultimate decision in favor of treating supplies to SEZ developers as exports and rejecting the demand of 10% of the value of goods.