2013 (5) TMI 890 - AT - Central Excise

SEZ Supplies Treated as Exports: Tribunal Rules on Duty Exemption

Karvir Nivasini Mahalaxmi Ispat Pvt. Ltd. Versus Commissioner of C. Ex., Pune-III

The Tribunal held that supplies to SEZ units are treated as exports, exempting manufacturers from duty payment under Rule 6 of the Cenvat Credit Rules. ... - Issues involved: Interpretation of Rule 6 of the Cenvat Credit Rules regarding payment of duty on goods cleared to SEZ Developers.Summary:Issue 1: Duty demands on goods cleared to SEZ DevelopersThe demands of duty were confirmed by the adjudicating authority based on the appellants availing Cenvat credit on inputs used for manufacturing goods cleared to SEZ Developers. The Revenue argued that the goods cleared to SEZ Developers were exempted, thus the manufacturer is liable to pay 8% to 10% of the price of the goods as per Rule 6 of the Cenvat Credit Rules.Decision:The Tribunal referred to the decision in Sujana Metal Products Ltd. v. CCE, Hyderabad, which clarified that supplies made to SEZ units are to be treated as exports. The definition of 'export' under the SEZ Act prevails over the Customs Act. Therefore, the application of Cenvat Credit Rules for recovery of amounts on goods supplied to SEZ units does not arise. The amendment to Rule 6(1) of the CCR, 2004 is applicable from when the rule came into existence, and the exception provided under Rule 6(6) applies to supply of exempted goods to SEZ units and developers/promoters.Conclusion:The Tribunal found the decision in Sujana Metal Products Ltd. applicable to the present case, setting aside the impugned orders and allowing the appeals on merits. The question of limitation was not addressed as the appeals were allowed based on the merits of the case.