SEZ supplies from DTA may not count as exempted clearances, limiting Cenvat credit reversal under Rule 6(3)(b).

Supplies from the Domestic Tariff Area to SEZ units or developers, when treated as exports under the SEZ framework, are not to be regarded as exempted clearances for invoking Rule 6(3)(b) of the Cenvat Credit Rules. The Tribunal considered the SEZ definition of export, departmental clarification, and the fact that the goods were not cleared under an exemption notification, along with the later amendment on SEZ clearances. On a prima facie view, Rule 6(3)(b) was inapplicable, leading to waiver of pre-deposit and stay of recovery pending disposal of the appeals.

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Issues: Whether supplies made from the Domestic Tariff Area to SEZ units/developers were to be treated as exempted goods so as to attract Rule 6(3)(b) of the Cenvat Credit Rules and warrant demand of pre-deposit.

Analysis: The supplies to SEZ units were examined in the light of the SEZ framework, the definition of export under the SEZ law, and the departmental clarification treating such supplies as in the nature of exports. The Tribunal noted that the goods were not supplied as exempted goods availing any exemption notification and also considered the later amendment relating to SEZ clearances. On a prima facie view, the supplies could not be treated as exempted goods for the purpose of Rule 6(3)(b).

Conclusion: The issue was decided in favour of the assessee, and Rule 6(3)(b) was held prima facie inapplicable to the supplies made to SEZ units.

Final Conclusion: Pre-deposit was waived and recovery was stayed pending disposal of the appeals on the strength of a prima facie view that DTA supplies to SEZ units were not exempted goods for Cenvat credit reversal purposes.

Ratio Decidendi: Supplies from the Domestic Tariff Area to SEZ units or developers, when treated as exports under the SEZ framework, are not to be regarded as exempted clearances for invoking Rule 6(3)(b) of the Cenvat Credit Rules.

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