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of <h1>2008 Amendment to Rule 6(6)(i) of Cenvat Credit Rules Applies Retrospectively to SEZ Developers and Units (6)(i)</h1> <h3>THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX AND THE COMMISSIONER OF CENTRAL EXCISE Versus M/s FOSROC CHEMICALS (INDIA) PVT LTD AND OTHERS</h3> The HC held that the 2008 amendment to Rule 6(6)(i) of the Cenvat Credit Rules, 2004, is retrospective. Consequently, the benefit of non-reversal of ... Cenvat Credit - Applicability of Amendment - supply of goods to SEZ - Whether the amendment to the Cenvat Credit Rules 2004, by substituting clause(i) of sub-rule (6) of Rule 6 of Cenvat Credit Rules 2004 by way of notification No.50/2008-C.E (N.T.) dated 31.12.2008 is prospective in operation or retrospective - Held that:- benefit of non-reversal/maintenance of separate inventory was extended when the excisable goods were cleared to a 'unit' in a special economic zone. The said benefit was not extended when the excisable goods removed without payment of duty or cleared to a 'developer' of a special economic zone for their authorized operation. However, in exercise of the powers conferred by section 37 of the Central Excise Act, 1944 and section 94 of the Finance Act, 1994, the Central Government amended the Cenvat Credit Rules, 2004 by issue of a notification - amendment has to be construed as retrospective in nature and the benefit of Rule 6(6)(1) as amended in 2008 has to be extended to the goods cleared to a 'developer' of a Special Economic Zone for their authorized operations. Therefore, we do no see any merit in these appeals - Decided against Revenue. ISSUES: Whether the amendment to clause (i) of sub-rule (6) of Rule 6 of the Cenvat Credit Rules, 2004, by Notification No.50/2008-C.E. (N.T.) dated 31.12.2008, is prospective or retrospective in operation'Whether the benefit of exemption from reversal of Cenvat credit on inputs used in manufacture of excisable goods cleared without payment of duty to a 'developer' of a Special Economic Zone (SEZ) applies retrospectively to the date of the original Rules'Whether the substitution of a provision in a statutory rule by an amending notification can be construed as clarificatory and retrospective in nature'Whether the provisions of the Special Economic Zones Act, 2005 override inconsistent provisions in the Cenvat Credit Rules, 2004, particularly regarding supplies to SEZ developers? RULINGS / HOLDINGS: The amendment substituting clause (i) of sub-rule (6) of Rule 6 of the Cenvat Credit Rules, 2004, by Notification No.50/2008-C.E. (N.T.) dated 31.12.2008, is clarificatory in nature and therefore retrospective.The benefit of exemption from reversal of Cenvat credit on inputs used in manufacture of excisable goods cleared without payment of duty to a 'developer' of a Special Economic Zone for their authorized operations is to be extended retrospectively as if the words 'to a developer of a special economic zone for their authorized operations' were part of the Rules from inception.Substitution of a statutory provision by amendment is to be construed as if the altered words had been written into the original enactment with pen and ink, and the old words scored out, unless such construction leads to repugnancy, inconsistency or absurdity.The Special Economic Zones Act, 2005, particularly Section 151, overrides the provisions of all other laws for the time being in force to the extent of any inconsistency, thereby supporting retrospective application of the amendment to Cenvat Credit Rules in favor of SEZ developers. RATIONALE: The Court relied on established constitutional and statutory principles governing amendments by substitution, including precedent that a substituted provision is deemed part of the original enactment from its inception unless it causes inconsistency or absurdity.Reference was made to authoritative decisions interpreting substitution as a clarificatory amendment that removes an 'obvious mistake' without taking away substantive rights or imposing penal consequences.The Special Economic Zones Act, 2005, was considered the overriding statute, with Section 151 explicitly eclipsing inconsistent provisions of other laws, thereby necessitating a construction of the Cenvat Credit Rules amendment as retrospective to align with the SEZ Act's definition of 'export' and exemption benefits.The Government's own circular (CBEC No.29/2006-Cus. dated 27.12.2006) was cited to demonstrate the intended retrospective treatment of supplies to SEZ developers as exports, reinforcing the clarificatory nature of the 2008 amendment.The Court emphasized liberal construction of exemption notifications in favor of the assessee, consistent with the principle that such notifications should be construed liberally to extend benefits where eligibility is established.
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