Retrospective Cenvat exemption clarification extends SEZ developer benefit for authorised operations under the amended rule.

An amendment substituting clause (i) of rule 6(6) of the Cenvat Credit Rules, 2004 was treated as clarificatory because it aligned the rule with the Special Economic Zones Act, 2005, under which supplies to a developer for authorised operations are treated as exports and inconsistent laws are overridden. The earlier wording referred only to a unit in a special economic zone and omitted a developer, creating an obvious inconsistency. The court therefore read the substituted words as having formed part of the rule from the outset and held the amendment to be retrospective, extending the exemption benefit to clearances made to a developer of a special economic zone for authorised operations.

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Issues: Whether the amendment substituting clause (i) of rule 6(6) of the Cenvat Credit Rules, 2004 by Notification No. 50/2008-C.E. (N.T.) dated 31.12.2008, extending the benefit to goods cleared to a developer of a special economic zone for authorised operations, is prospective or retrospective.

Analysis: The substitution of a provision ordinarily requires the earlier provision to be read as if the substituted words had always formed part of it. The amendment was made in the context of the Special Economic Zones Act, 2005, under which supplies to a unit or developer are treated as exports and the Act overrides inconsistent laws. Since the pre-amendment rule referred only to a unit in a special economic zone and omitted a developer, the amendment removed an obvious inconsistency and clarified the intended scope of the exemption. The amendment was therefore treated as clarificatory rather than substantive.

Conclusion: The amendment was held to be retrospective, and the benefit of rule 6(6)(i), as amended, extended to clearances made to a developer of a special economic zone for authorised operations.

Final Conclusion: The substantial question of law was answered in favour of the assessees and against the revenue, with the result that the revenue appeals failed.

Ratio Decidendi: A substituted provision that merely clarifies and aligns the rule with the governing statutory scheme is to be read as if the substituted words had been part of the rule from the outset, and such an amendment operates retrospectively.

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