Deemed exports for SEZ developer supplies exclude Rule 6 reversal, making the 10% demand unsustainable.

Supplies made to SEZ developers are treated as deemed exports under Rule 6(6)(i) of the Cenvat Credit Rules, 2004, so they fall outside the reversal or 10% payment requirement under Rule 6(3)(b). The discussion notes that the amendment effective from 31.12.2008 was treated in earlier decisions as clarificatory and retrospective, and that the Revenue's reliance on the Board circular did not change that position. On that basis, the demand calculated at 10% of the value of such clearances was held unsustainable, with consequential relief following in favour of the assessee.

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Issues: Whether supplies made to SEZ developers were to be treated as deemed exports so as to fall outside the reversal requirement under Rule 6(3)(b) of the Cenvat Credit Rules, 2004, and whether the demand based on 10% of the value of such clearances was sustainable.

Analysis: The dispute turned on the effect of the amendment made with effect from 31.12.2008, which expressly brought supplies to SEZ developers within the exempted category contemplated by Rule 6(6)(i). The Tribunal noted that the issue had already been settled in earlier decisions holding that clearances to SEZ developers are to be treated as deemed exports and are, therefore, not liable to the 10% payment prescribed by Rule 6(3)(b). It further noted that the post-amendment position and the Board circular relied upon by the Revenue had been considered in those decisions, which treated the amendment as clarificatory and retrospective in effect.

Conclusion: The demand under Rule 6(3)(b) was not sustainable. Supplies to SEZ developers were held to be deemed exports, and the appeal was allowed in favour of the assessee with consequential relief.

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