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2018 (2) TMI 279 - AT - Central ExciseRefund claim - deemed exports - supply of goods to units in Special Economic Zone - rule 5 of CCR, 2004 - Held that - it is apparent that supplies to special economic zones are not exports except then viewed through the provisions of Special Economic Zones Act, 2005 - The decision of the Tribunal in Commissioner of Central Excise, Pune II v. Quality Screens 2008 (1) TMI 746 - CESTAT, MUMBAI makes it amply clear that only physical exports would entitle the refund under rule 5 of the CCR 2004. The impugned order has erred in allowing the application under rule 5 of CCR 2004 - appeal allowed - decided in favor of Revenue.
Issues:
- Disposal of four appeals by Revenue against the rejection of refund claims under rule 5 of CENVAT Credit Rules, 2004. - Interpretation of whether clearances to Special Economic Zone (SEZ) units can be treated as exports for claiming refund of unutilized CENVAT credit. - Examination of settled law excluding supplies to SEZ units from export privileges. - Analysis of rule 5 of CENVAT Credit Rules, 2004 regarding the utilization and refund of CENVAT credit. - Determination of whether supplies to SEZs qualify as exports under the CENVAT scheme. Detailed Analysis: 1. The judgment pertains to the disposal of four appeals initiated by Revenue against the rejection of refund claims under rule 5 of CENVAT Credit Rules, 2004. The appeals were filed against the order-in-appeal setting aside the rejection of claims for refund sought by M/s Arrow Engineers for supplies to entities in SEZs deemed as exports under the special statute governing such zones. 2. The primary issue addressed in the judgment was the interpretation of whether clearances to SEZ units can be treated as exports for claiming a refund of unutilized CENVAT credit. The respondent argued that the Tribunal had allowed refunds of CENVAT credit in similar cases, emphasizing the importance of considering clearances to SEZ units as exports for refund purposes. 3. The judgment also analyzed settled law that excludes supplies to SEZ units from export privileges under the tax laws of the country. The Revenue contended that supplies to SEZs do not qualify as exports eligible for tax benefits, citing previous Tribunal decisions and circulars to support their stance. 4. A detailed examination of rule 5 of CENVAT Credit Rules, 2004 was conducted to determine the eligibility and conditions for utilizing and refunding CENVAT credit. The judgment highlighted the significance of rule 5 in providing a mechanism to restrict levies on exports and exempt transactions, ensuring that export costs are not burdened with additional taxes. 5. The judgment delved into whether supplies to SEZs qualify as exports under the CENVAT scheme. It was argued that while such supplies are not exports per se, they are treated similarly to exports for availing CENVAT credit. The judgment emphasized the need for specific provisions to extend export-related privileges to supplies to SEZs. 6. Ultimately, the judgment concluded that the impugned order erred in allowing the application under rule 5 of CENVAT Credit Rules, 2004. As a result, the order was set aside, and the appeals of Revenue were allowed, with cross-objections also being disposed of accordingly.
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