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TMI Blog2020 (1) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... y substituting the word cleared to unit in a Special Economic Zone or a developer in SEZ for their authorized operations. As per the appellant, this amendment within the Rule 6(6)(i) is applicable retrospectively whereas as per the Department, it is applicable prospectively. This issue is now no more res integra in view of the decision of the Karnataka High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX AND THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S FOSROC CHEMICALS (INDIA) PVT LTD AND OTHERS [ 2014 (9) TMI 633 - KARNATAKA HIGH COURT] wherein it has been held that the amendment carried out in Rule 6(6) by way of Notification No.50/2008 was retrospective. The impugned order is not sustainable in law - appeal allowed - decided in favor of appellant. X X X X Extracts X X X X X X X X Extracts X X X X ..... es, 2004 read with Section 11A of the Central Excise Act, 1944; ii. Interest should not be demanded from them in terms of Rule 14 of CENVAT Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944 and iii. Penalty should not be imposed on them in terms of Rule 15(1) of CENVAT Credit Rules, 2004. 2.2. The appellant filed detailed reply to the show-cause notices and raised the defence in support of their claim that supplies to the SEZ developer are exports and entitled to all exports benefits. The appellant in their reply have also given the decisions of various courts whereby their case is covered in their favour. After considering the submissions of the appellant, the Commissioner has rejected the defence of the appellant and confirmed the demand. 3. Heard both sides and perused the records. 4. Learned counsel for the appellant submitted that the impugned order is not sustainable as the same has been passed without properly appreciating the facts and the law. He further submitted that in reply to the show-cause notices, the appellant raised various defence but the same have not been considered by the Commissioner while passing the impugned order. He fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that the appellant had made clearances to M/s. Vikas Telecom Ltd. which is a SEZ developer without payment of Central Excise duty and availed the cenvat credit on the inputs used for the manufacture of such goods. He further submitted that the appellant did not maintain a separate account of inputs used for the manufacture of dutiable goods and exempted goods. Therefore the demand of 10% of the price of the goods supplied to SEZ developer is sustainable in view of Rule 6. He further submitted that subsequently the Rule 6(6)(i) was amended by Notification No.50/2008 to include the supplies made to SEZ developers also; but the amendment carried out by the Notification No.50/2008 is not available to the appellant since the period of dispute is prior to this amendment and the said amendment is prospective in nature and cannot be applied retrospectively. 6. After considering the submissions of both the parties and perusal of the material on record, we find that the only issue to be decided in both the show-cause notices dt. 30/07/2009 and 04/08/2009 is whether the assessee is required to pay an amount of 10% of the value of the goods as per Rule 6 of CCR in respect of items manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) reads as under : Sub-rule (6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either- (i) cleared to a unit in a special economic zone." 6. As is clear from the aforesaid provision, the benefit of non-reversal/ maintenance of separate inventory was extended when the excisable goods were cleared to a "unit" in a special economic zone. The said benefit was not extended when the excisable goods removed without payment of duty or cleared to a "developer" of a special economic zone for their authorized operation. However, in exercise of the powers conferred by Section 37 of the Central Excise Act, 1944 (1 of 1944) and Section 94 of the Finance Act, 1994 (32 of 1994), the Central Government amended the Cenvat Credit Rules, 2004 by issue of a notification as under :- Notification: 50/2008-C.E. (N.T.) dated 31-Dec-2008 Cenvat Credit Rules, 2004 - Third amendment of 2008 In exercise of the powers conferred by Section 37 of the Central Excise Act, 1944 (1 of 1944) and Section 94 of the Finance Act, 1994 (32 of 1994), the Central Government nearby makes the following rules further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and all the effects and consequences that follow in the case of an amending Act the same would also follow in the case of a substituted section in an Act." 11. In fact, the Division Bench of this Court in the case of SHA Chunnilal Sohanraj v. T. Gurushantappa reported in 1972 (1) MYS. L.J. PAGE 327 DB has held as under : "When an amending Act has stated that the old sub-section has been substituted by the new sub-section the inference is that the Legislature intended that the substituted provision should be deemed to have been part of the Act from the very inception." 12. Recently, the Hon'ble Apex Court in the case of Government of India v. Indian Tobacco Association reported in 2005 (187) E.L.T. PAGE 162 (S.C.), while dealing with the exemption notification which was issued by way of substitution., held as under : "15. The word 'substitute' ordinarily would mean 'to put (one) in place of another', or 'to replace'. In Black's Law Dictionary, Fifth Edition, at page 1281, the word 'substitute' has been defined to mean 'To put in the place of another person or thing' or 'to exchange'. In Collins English Dictionary, the word 'substitute' has been defined to mean 'to serve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... why it was brought by way of "substitution". The effect of the said "substitution" is that the Cenvat Rules 2004 are to be read and construed as if the altered words had been written into the Rules of 2004 with pen and ink and the words "to a developer of the SEZ for their authorized operation" was there from the inception. This is the understanding of the Government as is also clear from the circular issued by the C.B.E.&C. bearing No. 29/2006-Cus., dated 27-12- 2006 wherein clause 4 reads as under :- "4. In the light of the aforesaid provisions, with effect from 14-3- 2006, Chapter XA of the Customs Act, 1962, the SEZ Rules, 2003, the SEZ (Customs Procedure) Regulations, 2003, and the exemption Notification No. 58/2003-C.E., dated 22-7-2003 regarding the supply of goods to SEZ units & SEZ developers have become redundant. Consequently the supplies from DTA to a SEZ unit, or to SEZ developers for their authorized operations inside a SEZ notified under sub-section (1) of Section 4 of the Act, may be treated as in the nature of exports." 14. Therefore, it is clear, the said amendment has to be construed as retrospective in nature and the benefit of Rule 6(6)(i) as amended in 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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