2016 (11) TMI 188 - AT - Central Excise

Refund claim of unutilized accumulated cenvat credit in respect of clearances of goods made to SEZ unit during the period in dispute under Rule 5 of the Cenvat Credit Rules, 2004 - supplies made to SEZ are considered as physical export for all the purposes - reference made to the CBEC Circular No. 1001/8/2015-CX.8 dated 28.04.2015 and decision in the case of Sirmaxo Chemicals Pvt. Ltd. Vs. CCE, Thane-II 2016 (6) TMI 543 - CESTAT MUMBAI where it was held that according to the SEZ Act, supply of goods from DTA to the SEZ constitutes export. Further, as per Section 51 of the SEZ Act, the provisions of the SEZ Act shall have over riding effect over provisions of any other law in case of any inconsistency. Section 53 of the SEZ Act makes an SEZ a territory outside the customs territory of India. Held that - The ratio of the judgment relied upon by the learned counsel for the respondent squarely applies. It is clear that in respect of supplies made to SEZ unit, it shall be eligible for all benefits available under the Central Excise Act 1944 and Rules made thereunder. Therefore there is no infirmity in the order passed by the Commissioner (Appeals) which warrants interference by the Tribunal - appeal dismissed - decided against Revenue.

Summary

Issues:
Refund of unutilized cenvat credit for clearances to SEZ unit under Rule 5 of Cenvat Credit Rules, 2004.

Analysis:
The case involves an appeal against the Commissioner (Appeals) order allowing the refund claim of unutilized cenvat credit for clearances to a SEZ unit. The appellant contended that the refund is not admissible to DTA unit on clearances to SEZ units, as the SEZ Act is intended to benefit only SEZ units, and the deeming fiction of export under SEZ Act is exclusively meant for SEZ units. On the other hand, the respondent argued that supplies to SEZ are considered as physical exports for all purposes, as per Section 2(m) of SEZ Act, 2005, and SEZ is treated as located outside India. The respondent relied on SEZ Rules 2006 and CBEC Circulars to support their argument that supplies from DTA to SEZ unit are eligible for export benefits.

The learned AR submitted that the impugned order is not sustainable in law, emphasizing that the refund under Rule 5 of Cenvat Credit Rules 2004 is not admissible to DTA unit on clearances to SEZ units. The respondent's counsel countered this argument by stating that supplies made to SEZ are considered exports, as per SEZ Act, and are eligible for export benefits as per SEZ Rules 2006 and CBEC Circulars. The counsel relied on a CBEC Circular and a judgment to support their position that supplies to SEZ units are entitled to benefits under the Central Excise Act 1944 and related Rules.

The Tribunal upheld the impugned order of the Commissioner (Appeals) based on the arguments presented by the respondent's counsel. The Tribunal found that supplies made to SEZ units are eligible for all benefits available under the Central Excise Act 1944 and related Rules, as clarified in the CBEC Circular and supported by the judgment cited. Therefore, the Tribunal dismissed the appeal of the Revenue, concluding that there was no infirmity in the Commissioner (Appeals) order that warranted interference by the Tribunal.