Rule 6 exclusion for SEZ developer clearances applied retrospectively, defeating the input credit reversal demand.

Clearances from a domestic tariff area unit to an SEZ developer were treated as covered by the exclusion in Rule 6(6) of the Cenvat Credit Rules, 2004 after the retrospective amendment effective from 31.12.2008. Because the amended exclusion applied to such supplies, the assessee was not required to pay 10% of the price under Rule 6 on common input credit reversals. The demand was therefore held unsustainable and the assessee succeeded.

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Issues: Whether clearances of goods to a Special Economic Zone developer during 2008-09 attracted the 10% amount under Rule 6 of the Cenvat Credit Rules, 2004, where the assessee had availed common input credit and the exclusion under Rule 6(6) was amended with retrospective effect.

Analysis: The appeal turned on the applicability of the amended Rule 6(6) of the Cenvat Credit Rules, 2004 to supplies made from a domestic tariff area unit to an SEZ developer. The Tribunal followed its earlier view that, in light of the amendment effective from 31.12.2008 and its retrospective operation, such supplies were covered by the exclusion from the reversal requirement under Rule 6.

Conclusion: The demand to pay 10% of the price of the goods cleared to the SEZ developer was not sustainable, and the assessee succeeded.

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