SEZ supply treated as export issue supports waiver of pre-deposit and stay on recovery pending appeal

Pre-deposit of duty and penalty was waived and recovery stayed pending appeal in a dispute involving clinker captively used in cement manufactured for supply to an SEZ. The Tribunal noted conflicting views on whether supplies to an SEZ are to be treated as export for excise purposes and relied on the Board's circular supporting export treatment of SEZ supplies. On that basis, and considering the existence of contrary decisions, interim relief was granted at the admission stage. The operative effect was suspension of recovery during pendency of the appeal.

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Issues: Whether pre-deposit of duty and penalty should be waived and recovery stayed pending the appeal in view of the claim that supplies to SEZ are to be treated as export and that captive consumption of clinker attracted exemption.

Analysis: The appeal arose from a demand raised on clinker used captively in the manufacture of cement supplied to SEZ. The Tribunal noted the competing views on whether such SEZ supplies are to be treated as export for excise purposes and observed that the Board's circular supported treatment of SEZ supplies as export. In view of these considerations and the existence of conflicting decisions, the Tribunal found it appropriate to grant interim relief at the stage of admission.

Conclusion: Pre-deposit of duty was waived and stay on recovery was granted during the pendency of the appeal.

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