2008 (10) TMI 466 - AT - Central Excise

Appellate Tribunal grants exemption for duty on clinker cleared to SEZ under Notification

The Appellate Tribunal considered a duty demand on clinker in cement cleared to a Special Economic Zone (SEZ) under Notification No. 67/95-C.E. The ... Stay/Dispensation of pre-deposit After examination, duty exceeding Rs.55 lakhs and equal penalty were demanded on clinker contained in 21,160.26 MT of cement cleared to a Special Economic Zone (SEZ) (April-October 2007) by denying benefit of Notification No. 67/95-C.E. dt. 16-3-95. The appellants contend that cement cleared to SEZ should be deemed to have been 'exported' and thus the proviso to the Notification cannot be invoked to demand duty on clinker (input). The SEZ Act, 2005 deems SEZs as territories outside the domestic tariff area, so clearance to SEZ is to be reckoned as 'export'. The court reasons that goods that are 'exempt from the whole of duty of excise leviable thereon or are chargeable to 'Nil' rate of duty' are covered, but only those inputs 'used in or in relation to the manufacture of the final products coming within the scope of this expression' qualify. Prima facie the proviso is not attracted; appellants are prima facie entitled to exemption on clinker. Waiver of pre-deposit and stay of recovery of duty and penalty granted.