Tribunal grants CENVAT credit to appellant for services to SEZ units under amended Rule 6

The Tribunal ruled in favor of the appellant, holding that they were entitled to CENVAT credit for inputs used in providing services to SEZ units or developers. The Tribunal found that the appellant's claim of exemption under the amended Rule 6 was valid, citing legal precedents and the retrospective effect of the rule amendment. The impugned order demanding service tax without considering the appellant's claim was deemed legally unsustainable, leading to the appeal being allowed and consequential relief granted.

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Issues:
- Liability to pay service tax on exempted services provided without maintaining separate accounts
- Applicability of Rule 14 of the CENVAT Credit Rules, 2004
- Claim of exemption under Notification No. 3/2001-CE (NT) dated 01/03/2011
- Failure of the adjudicating authority to consider the appellant's claim
- Interpretation of Rule 6 of the CENVAT Credit Rules, 2004 in relation to services provided to SEZ units
- Legal precedent supporting the appellant's claim

Analysis:

1. The appeal challenged an order demanding service tax for providing both taxable and exempted services without maintaining separate accounts for CENVAT credit availed. The appellant contended that services provided to SEZ units were excluded from the scope of Rule 6 of the CENVAT Credit Rules, 2004, as per Notification No. 3/2001-CE (NT) dated 01/03/2011, which had retrospective effect. The adjudicating authority upheld the demand and imposed penalties, leading the appellant to appeal.

2. The appellant argued that as per the amended Rule 6, they were not required to reverse any CENVAT Credit for services rendered to SEZ units. They cited legal precedents to support their claim, emphasizing the retrospective effect of the rule amendment from 10/02/2006 to 28/02/2011. The appellant's counsel highlighted that the impugned order was not sustainable in law due to the exemption provided under the amended Rule 6.

3. The Tribunal noted that the appellant had indeed provided services to SEZ units and developers during the relevant period, with details reflected in their filed returns. The amendment to Rule 6 via Notification No. 3/2011 exempted the appellant from reversing CENVAT credit for inputs used in rendering services to SEZ units. The Tribunal found that the adjudicating authority failed to consider the appellant's claim and held that the impugned order was legally unsustainable.

4. Additionally, the Tribunal referenced a judgment by the Hon'ble High Court of Bombay in Repro India Ltd., which clarified that Rule 6 exceptions applied to exports, including supplies to SEZ units. The Tribunal concluded that the appellant was entitled to CENVAT credit for inputs used in providing services to SEZ units or developers. Consequently, the Tribunal set aside the impugned order and allowed the appeal, providing consequential relief as necessary.

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