SEZ warehousing supplies treated as export, supporting refund of unutilised Cenvat credit for authorised operations.

Supply of goods to a Special Economic Zone warehousing unit for its authorised operations was treated as export under the SEZ framework, because Rule 18(5) of the SEZ Rules, 2006 recognises warehousing and related commercial operations as authorised activities and the authorisation letter supported that use. On that basis, the supply qualified for refund of unutilised Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2005, and the refund was upheld.

---

---

Issues: Whether supply of goods to a Special Economic Zone warehousing unit for its authorized operations qualified as export so as to sustain refund of unutilized Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2005.

Analysis: The claim was examined in the context of the SEZ framework and the nature of the recipient unit's authorized operations. Rule 18(5) of the SEZ Rules, 2006 permits units in Free Trade and Warehousing Zones, or such units set up in other Special Economic Zones, to hold goods on account of the foreign supplier for dispatch as per the owner's instructions and to undertake trading without processing. The authorization letter and Notification No. S.O.1846(E) dated 27-10-2006 were relied upon to show that warehousing and commercial operations were recognized authorized operations. On that basis, supplies made to the SEZ unit were treated as exports and the refund was held admissible.

Conclusion: The supply to the SEZ warehousing unit was held to be an export for authorized operations, and the refund under Rule 5 of the Cenvat Credit Rules, 2005 was upheld.

---