CENVAT credit for supplies to SEZ developers treated as deemed exports, with entitlement upheld before the later amendment.

CENVAT credit on inputs and input services used for goods supplied to SEZ developers was held available even for the period before 31 December 2008, because such supplies were treated as deemed exports under the SEZ regime. The earlier view denying credit was found inconsistent with the binding High Court ruling, and the subsequent amendment was treated as clarificatory rather than creating the entitlement for the first time. The denial of credit was therefore not sustainable and the issue was decided in favour of the assessee.

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Issues: Whether CENVAT credit on inputs and input services used in the manufacture of goods supplied to SEZ developers was available prior to 31/12/2008.

Analysis: The prior view denying credit was found inconsistent with the binding High Court decision holding that supplies to SEZ developers constitute deemed export under the SEZ regime. On that basis, credit was held to be available even for the period before the specific amendment of 31/12/2008.

Conclusion: The denial of CENVAT credit was not sustainable and the issue was decided in favour of the assessee.

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