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TMI Blog2016 (3) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, it was totally unwarranted on the part of the adjudicating authority and the appellate authority to go into this question and come to their own findings in the matter. Decided against the revenue - ST/10893/2013, ST/12292/2013, ST/12410-12412/2013, - Order No.A/10147-10187/2016 - Dated:- 2-2-2016 - MR. P.K. DAS, MEMBER (JUDICIAL) AND MR. P.M. SALEEM, MEMBER (TECHNICAL) ST/12569-12571/2013, ST/12828/2013, ST/12938/2013, ST/12940-12941/2013, ST/13094/2013, ST/13249-13250/2013, ST/13288/2013, ST/13369/2013, ST/13526/2013, ST/13541/2013, ST/13605/2013, ST/13804/2013, ST/13811/2013, ST/13882/2013, ST/12333/2014, ST/12412/2014, ST/12479/2014, ST/12772-12774/2014, ST/13047/2014, ST/13093/2014, ST/13098-13099/2014, ST/13217-13218/2014, ST/13338-13339/2014, ST/13352/2014, ST/13554/2014, ST/13725-13726/2014 For the Petitioner : Shri Vikram Nankani, Sr.Advocate, Shri Naresh Thakkar, Shri Hardik Modh, Shri Amit Laddha - Advocates For the Respondent : Dr. J. Nagori, A.R. (Additional Commissioner) ORDER PER: P.K. DAS Common issues are involved in these appeals, and therefore, all are taken up together for disposal. 2. The relevant facts of the case, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Z operations as well as DTA (Domestic Tariff Area) operations and other business, therefore, services cannot be considered as wholly consumed within SEZ and they have not fulfilled the condition of notifications. The other ground is that the Commissioner (Appeals) has no power to remand the matters to the Adjudicating authority. The Assessee also filed appeals against the impugned orders insofar as the rejection of refund claims on some of input service on the ground that the services of transport by air for domestic journey provided is not covered under the approved service category of Passengers embarking in India for International Journey , Reimbursement of expenses etc. 5. Heard both sides and perused the records. RE: APPEALS FILED BY THE REVENUE 6. The main ground of the appeals filed by the Revenue against the impugned orders is that the input services were not wholly consumed within the SEZ, as the Assessee carried out business other than SEZ operation as they installed transmission lines in DTA from Mundra to Mohindergarh (Haryana) through which the power generated in SEZ has been transmitted to DTA. So, it is hit by Explanation to Para 2(a) of the exemption Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Approval Letter that the authorised operations to be carried out in the power sector in SEZ, for supply to SEZs, EOUs in Gujarat and other SEZs, EOUs and others. In the present case, there is no evidence placed by the Revenue that they have carried out the business other than SEZ and they have any DTA Unit. It is further submitted that the Board of Approval had allowed them to transmit surplus electricity as per SEZ Rules and therefore, the Adjudicating authority cannot raise any objection. He relied upon the various decisions and also drew the attention of the Bench to various provisions of the SEZ Act and Rules. The learned Senior Advocate also submitted Written Submissions with case laws. 10. Both the sides referred to various provisions of The SEZ Act and The SEZ Rules as under:- (A) THE SEZ ACT, 2005:- Section 2 - Definitions (a) . . . (c) authorised operations means operations which may be authorised under sub-section (2) of section 4 and sub-section (9) of section 15; . . . (f) Co-Developer means a person who, or a State Government which, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oper and the entrepreneur shall be entitled to the following exemptions, drawbacks and concessions, namely :- . . . (e) exemption from service tax under Chapter V of the Finance Act, 1994 (32 of 1994) on taxable services provided to a Developer or Unit to carry on the authorised operations in a Special Economic Zone; . . . (2) The Central Government may prescribe the manner in which, and the terms and conditions subject to which, the exemptions, concessions, drawback or other benefits shall be granted to the Developer or entrepreneur under sub-section (1). SECTION 30. Domestic clearance by Units. -?Subject to the conditions specified in the rules made by the Central Government in this behalf, - (a) any goods removed from a Special Economic Zone to the Domestic Tariff Area shall be chargeable to duties of customs including anti-dumping, countervailing and safeguard duties under the Customs Tariff Act, 1975 (51 of 1975), where applicable, as leviable on such goods when imported; and (b) the rate of duty and tariff valuation, if any, applicable to go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Export Oriented Unit or to Electronic Hardware Technology Park Unit or to Software Technology Park Unit or Bio-technology Park Unit, shall be without payment of duty; (d) for sale of surplus power in Domestic Tariff Area, the Unit shall obtain permission from the Specified Officer and the State Government authority concerned; (e)duty on sale of surplus power to the Domestic Tariff Area shall be as provided for in this rule. (4) Valuation and assessment of the goods cleared into (4) Domestic Tariff Area shall be made in accordance with Customs Act and rules made thereunder. 11. The learned Senior Advocate had taken Bench to the detailed correspondence with the Ministry of Commerce Industry for approval for the authorized operation to be carried out by the Assessee in terms of the SEZ Act and Rules thereunder. The relevant correspondences are reproduced below:- i) By letter dt.31.08.2006, the Assessee applied for approval to the Board of Approval (BOA) as Developer to set up a Power sector specific SEZ at Mundra, Kuchh, Gujarat as under:- Dear Sir, Sub: Adani Power Private Limited (APPL) Approval as Developer to set up a Power sector specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the necessary infrastructure facilities can be created at the earliest. ii) By letter dt.19.12.2006, the Director of the Ministry of Commerce Industries, Department of Commerce, approved the proposal for setting up of a sector specific SEZ for power sector for supply of power to SEZs, EOUs in Gujarat and other SEZs, EOUs and others at Village Tunda and Siracha, Taluka Mundra, Dist: kutch, Gujarat. The relevant portion of the said letter dt.19.12.2006 is reproduced below:- With reference to your above mentioned, Government of India is pleased to grant formal approval to your proposal for development, operation and maintenance of the sector specific Special Economic Zone for power sector for supply of power to SEZs, EOUs in Gujarat and other SEZs, EOUs and others at Village Tunda and Siracha, Taluka Mundra, District Kutch, Gujarat by M/s Adani Power Pvt. Ltd, as per details given below:- I. PROPOSAL and PROJECT DETAILS:- To set up a sector specific Special Economic Zone for power sector for supply of power to SEZs, EOUs in Gujarat and other SEZs, EOUs and others over an area of 293-88-10 hectares at Village Tunda and Siracha, Taluka Mundra, District Kutch, Guj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic Zone for supply of power to SEZs, EOUs in Gujarat and other SEZs, EOUs and others at Village Tunda and Siracha, Taluka Mundra, District Kutch, Gujarat, proposed to be developed by M/s Adani Power Private Limited, as per the list attached at Annexure of this letter in terms of the Special Economic Zones Act, 2005 and the Special Economic Zones Rules, 2006. 2. Government has, on 27th October, 2006, notified the list of authorized operations that can be undertaken in the SEZs and these alone would qualify for exemptions, concessions and drawback. A copy of the notification No.S.O.1846, dt.27.10.2006 is available on the Departments website www.sezindia.nic.in. 3. The procedure prescribed in Special Economic Zones Rules, 2006 must be followed for availing the said exemptions, drawback and concessions.- v) By letter dt.27.02.2009, the Ministry of Commerce approved the proposal as co-developer to the Assessee for providing infrastructure facilities in the multi-product Special Economic Zone at Mundra. By letter dated 26.06.2009, 24.05.2012, SEZ, Mundra Port, conveyed approval of List of Specified Services. vi) The Specified Officer, SEZ, Mundra, directed by letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant portion of the Notification No.17/2011-ST, dt.01.03.2011 is reproduced below:- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act) read with sub-section 3 of section 95 of Finance (No. 2), Act, 2004 (23 of 2004) and sub-section 3 of section 140 of the Finance Act, 2007 (22 of 2007) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 9/2009-Service Tax, dated the 3rd March, 2009, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide G.S.R. 146(E), dated the 3rd March, 2009, except as respects things done or omitted to be done before such supersession, the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services specified in clause (105) of section 65 of the Finance Act, chargeable to tax under section 66 or section 66A of the Finance Act, received by a Unit located in a Special Economic Zone (hereinafter referred to as SEZ) or Developer of SEZ for the authorised operations, from the whole o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund = service tax paid on specified services used for SEZ Authorised Operations shared with DTA Unit for the period X Export turnover of SEZ Unit for the period/Total turnover for the period 13. In the present appeals, the Assessee is approved for authorized operations and having status of unit for development, operation and maintenance of the sector specific SEZ for power sector for supply of power and received various input services used for the authorized operation. They filed refund claims as per Para 2(c) of the notification, in respect of Service Tax paid on specified services for authorized operation in SEZ. Show Cause Notices were issued periodically proposing to reject the refund claims on the ground that the Assessee failed to establish that the specified services were received and used for authorized operation and were wholly consumed within SEZ as well as do not fulfill the conditions of Explanation to Para 2(a) of the Notification No.17/2011-ST (supra). The Adjudicating authority rejected the refund claims. By the impugned orders, Commissioner (Appeals) allowed the appeal of the Assessee on this issue. The learned Authorised Representative for the Revenue drew o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission line outside SEZ for supply of power to DTA and supply of power in DTA cannot be considered as authorized operation within SEZ. There is no dispute regarding supply of surplus power outside SEZ. The only thing is that such services cannot be termed as wholly consumed within SEZ, since the services have been shared between SEZ and DTA operations. Thus, Commissioner (A) has failed to appreciate the fact that the services received and consumed in respect of activities carried out by the claimant outside SEZ cannot be considered as received and consumed in authorized operation within SEZ. 15. We find that there is no dispute that the Assessee fulfilled the condition of Para 2(b) of the notification, as the Assessee obtained a list of taxable services as required for authorized operation approved by the Approval Committee of the concerned SEZ. The learned Senior Advocate submits that the Assessee does not own or carry out any business other than SEZ operation and furnished the declaration as per condition Para 2(c) of the notification. He has also referred to letter dt.04.10.2012 of the Specified officer of APSEZ Mundra as quoted above, directing the Assessee to file the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration of power. On a query from the Bench, the learned Senior Advocate submits that they have not availed the CENVAT Credit on goods used for transmission power and cables used for transmission outside SEZ. It is clear that the Assessee had not availed CENVAT Credit on the raw materials or consumables used in the transmission of power in DTA. The learned Senior Advocate stated that the Ministry of Commerce vide Letter No.6/3/2006-SEZ dt.27.02.2009 which has been superseded by letter dt.21.03.2012 dispensed with the condition of earning net foreign exchange in the Assessee case (generation of power within SEZ). This shows that the Assessee is not required to earn foreign exchange as it would not be possible for the Assessee to earn foreign exchange. Mere selling of surplus power in DTA and installing dedicated transmission lines into DTA would not mean that the Assessee owns or carries on any business other than the business in SEZ. 17. There is a distinction between the expression Sales in DTA as referred in Rule 47 of SEZ Rules and the words carry on any business other than operations in SEZ and sharing between Authorised operation in SEZ Unit and DTA Unit as referred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer to SEZs, EOUs in Gujarat State and other SEZs and EOUs and others at Village Tunda and Siracha, Taluka Mundra, District Kutch, State of Gujarat. So, the Assessee would be entitled to supply powers to SEZs, EOUs in Gujarat State and other SEZs and EOUs and others. The learned Authorised Representative submits that the word others in the said notification would apply to at Village Tunda and Siracha Taluka Mundra . We are unable to accept the contention of the learned Authorised Representative. The expressions supply of power to Special Economic Zones (SEZs) and Export Oriented Units (EOUs) in Gujarat and other SEZs, EOUs and others in Notification dt.10.05.2007 would be read together and the plurality of word Others would indicate the other places, apart from SEZs and EOUs. The said notification notifies the area at Village Tunda and Siracha, Taluka Mundra for set up of SEZ. Thus, it is clearly evident that Ministry of Commerce and Industry had approved supply of power in DTA. It is already observed that the supply of surplus power in DTA is not the business of Assessee. Rule 47 of SEZ Rules permitted to transfer surplus power in DTA, which is within the purview of authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue dismissed the appeal filed by the Revenue. In that case, the question raised before the Hon'ble High Court as to whether the CESTAT is correct in holding that in Service Tax matters, the Commissioner (Appeals) has power to remand the matter back to the Adjudicating authority for de-novo adjudication. The Hon'ble High Court held as under: 15. We, however, cannot accept the argument of Ms. Mandavia that by virtue of sub-section (5) of Section 85, the same limitation on the Commissioner (Appeals) to remand a proceeding contained in Section 35A(3) of the Central Excise Act, 1944 must apply in the appeals under Section 85 of the Finance Act, 1994 also. This is so because, sub-section (5) of Section 85 though requires the Commissioner (Appeals) to follow the same procedure and exercise same powers in making orders under Section 85, as he does in the Central Excise Act, 1944 in appeals, this sub-section itself starts with the expression subject to the provisions of this Chapter . Sub-section (4) of Section 85 itself contains the width of the power of the Commissioner (Appeals) in hearing the proceedings of appeal under Section 85. The scope of such powers flowing from su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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