Appellate tribunal rules duty exemption for clinker used in SEZ clearance. SEZ Act provisions.

The appellate tribunal allowed the appeal, ruling that the appellant's use of clinker in duty exempted cement for clearance to a Special Economic Zone does not incur duty liability. The decision was based on the provisions of the SEZ Act and a relevant notification, which exempted the appellant's clinker manufacturing process and clarified that supplies to SEZ are not subject to duty under the SEZ Act.

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Issues:
Allegation of using clinker in duty exempted cement for SEZ clearance

Analysis:
The judgment deals with the issue of whether the appellant, by using clinker in the manufacture of duty exempted cement cleared to a Special Economic Zone (SEZ), would be liable to duty. The Notification No. 67/950CE dated 16/03/1995 exempts goods specified in column 2 of the Table when manufactured in a factory and used within the factory of production or in relation to the manufacture of final products specified in column 3 of the Table. The clinker manufactured by the appellant falls under column 2 of the Table and is not liable to duty as per the notification.

Regarding the final goods falling under column 3 of the Table, which are manufactured using the exempted intermediate goods, i.e., clinker, it is highlighted that Section 51 of the SEZ Act, 2005, contains an overriding provision exempting supplies to SEZ from the levy of duty. Furthermore, Section 2(m) of the SEZ Act, 2005, deems supplies to SEZ by a Domestic Tariff Area (DTA) as exports. Consequently, there would be no duty levy on the cement cleared to SEZ as per the provisions of the SEZ Act.

In conclusion, the appellate tribunal allowed the appeal, emphasizing that the clinker manufactured by the appellant for the production of duty exempted cement cleared to SEZ does not attract duty liability based on the provisions of the SEZ Act and the relevant notification.

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