Retrospective Rule 6 relief for SEZ developer supplies: clarificatory amendment barred reversal demand on authorised operations clearances.

A clarificatory substitution of Rule 6(6)(i) of the Cenvat Credit Rules, 2004 was treated as retrospective because it aligned the Rules with the SEZ regime, under which supplies from the Domestic Tariff Area to a Special Economic Zone developer for authorised operations are treated as exports. On that basis, clearances to SEZ developers made before 31.12.2008 also qualified for the Rule 6(6)(i) benefit, and no reversal demand under Rule 6 could be sustained.

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Issues: Whether the amendment to Rule 6(6)(i) of the Cenvat Credit Rules, 2004 by Notification No. 50/2008-C.E. (N.T.) dated 31.12.2008 is retrospective and, if so, whether clearances of goods to a Special Economic Zone developer attract the demand under Rule 6.

Analysis: The Tribunal followed the binding view that supplies from the Domestic Tariff Area to a Special Economic Zone developer for authorised operations are treated as exports under the Special Economic Zones Act, 2005. The amendment substituting clause (i) of sub-rule (6) of Rule 6 of the Cenvat Credit Rules, 2004 was held to be clarificatory in nature and therefore retrospective, because it only brought the text of the Cenvat Credit Rules into conformity with the export treatment already recognised under the SEZ regime. On that basis, the benefit of Rule 6(6)(i) extended to clearances made to SEZ developers even for the period prior to 31.12.2008.

Conclusion: The demand under Rule 6 was not sustainable and the Revenue's appeal was rejected.

Ratio Decidendi: A clarificatory substitution to Rule 6(6)(i) of the Cenvat Credit Rules, 2004 applies retrospectively and exempts clearances to SEZ developers for authorised operations from the Rule 6 reversal demand.

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