SEZ supplies treated as exports, so Rule 6 Cenvat Credit reversal is not attracted on clearances to developers.

Supplies made to SEZ developers are treated as exports for the purpose of Rule 6 of the Cenvat Credit Rules, 2004, so reversal or payment under that rule is not attracted on such clearances. The settled position extended to supplies to SEZ units and SEZ developers/promoters, and the Rule 6(6) exception was applied accordingly. On that basis, the demand under Rule 6 could not be sustained.

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Issues: Whether clearances of goods to Special Economic Zone developers were to be treated as exports so that no amount was payable under Rule 6 of the Cenvat Credit Rules, 2004.

Analysis: The appeals turned on the treatment of supplies made to SEZ developers. The Tribunal applied the settled position that such supplies are to be regarded as exports for the relevant purpose. Once the clearances are treated as exports, the mechanism for recovery under Rule 6 of the Cenvat Credit Rules, 2004 does not apply. The amendment and the exception under Rule 6(6) were also held applicable to supplies to SEZ units and SEZ developers/promoters.

Conclusion: The demand under Rule 6 was not sustainable and the impugned orders were set aside.

Final Conclusion: The appeals succeeded on merits, and the demand raised on supplies to SEZ developers could not be sustained.

Ratio Decidendi: Supplies made to SEZ units or developers are to be treated as exports for the purpose of Rule 6 of the Cenvat Credit Rules, 2004, and therefore reversal or payment under that rule is not attracted.

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