Court grants appellant Cenvat credit for supplies to SEZ developers, ruling in favor of export treatment

The court allowed the appeal in favor of the appellant, setting aside the denial of cenvat credit for supplies to SEZ developers. The court held that supplies made by the DTA unit to the SEZ Developer before 13.12.2008 should not be treated as 'exempted clearances' under the Cenvat Credit Rules. Following established legal principles, it was determined that such supplies are to be considered as exports of dutiable goods, entitling the appellant to the benefit of the exception in Rule 6(6) of the Cenvat Credit Rules 2004. The judgment provided relief to the appellant based on this interpretation.

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Issues:
- Denial of cenvat credit in respect of supplies made to SEZ developer.
- Whether supplies made by DTA unit to SEZ Developer prior to 13.12.2008 are to be treated as 'exempted clearances' under Cenvat Credit Rules.

Analysis:
1. The appeal was against the Commissioner's order upholding the denial of cenvat credit for supplies to SEZ developer. The appellant, engaged in manufacturing Concrete Blocks, availed cenvat credit for duty paid on raw materials. They supplied finished goods to SEZ developers without duty payment, leading to a show-cause notice and subsequent denial of credit.

2. The counsel for the appellant argued that the issue revolved around whether supplies made by DTA unit to SEZ Developer before 13.12.2008 should be considered 'exempted clearances' under Cenvat Credit Rules. Citing various decisions, including Sujana Metal Products Ltd. case, it was contended that such supplies should not be treated as exempted clearances, thus Rule 6(3) of Cenvat Credit Rules 2004 should not apply.

3. The AR, on the other hand, acknowledged the judgments favoring the appellant's stance. Following the precedent set by previous decisions, it was established that post the enactment of the Special Economic Zones Act 2005, supplies from DTA to SEZ are treated as export of dutiable goods. Therefore, the benefit of exception in Rule 6(6) of Cenvat Credit Rules 2004, which does not mandate separate accounts for dutiable and non-dutiable inputs/services, applies. Consequently, the judgment favored the appellant, setting aside the impugned order with any consequential relief.

4. The judgment was pronounced on 18.08.2016, allowing the appeal and providing relief to the appellant based on the established legal principles and precedents cited in favor of treating supplies to SEZ developers from DTA as exports of dutiable goods.

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