Tribunal Rules in Favor of Appellant on Duty Demand Dispute

The Tribunal set aside the Order-in-Original, ruling in favor of the Appellant, as the duty demand, interest, and penalty were deemed unsustainable both on merits and limitation grounds. The Tribunal found that supplies to SEZ by DTA units qualify as exports under the SEZ Act, and a substitution in Rule 6(6)(i) was clarificatory and retrospective, treating SEZ developers equally with SEZ units. The Appellant's compliance with CBEC circular and known clearances led to the appeal's success, with consequential relief granted as per law.

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Issues:
Violation of Rule 6(3) of Cenvat Credit Rules, 2004 for exporting goods to SEZ without payment of duty and not maintaining separate accounts for common inputs availed under Cenvat credit.

Analysis:
The appeal challenged an Order-in-Original passed by the Commissioner of Central Excise, Bolpur, regarding the export of Mild Steel Rounds and TMT Bar to SEZ developers without paying duty. The show cause notice alleged violations of Rule 6(3) of Cenvat Credit Rules, 2004 and failure to maintain separate accounts for common inputs. The Appellant argued they followed CBEC circular No. 29/2006-Cus, treating supplies to SEZ as exports. The Appellant also cited Rule 6(6) of Cenvat Credit Rules, 2004, which exempted excisable goods removed without duty payment to SEZ units. The Advocate contended that a substitution in Rule 6(6)(i) was clarificatory and retrospective, supported by various judgments. The Appellant also claimed the demand was time-barred, citing the Sujana Metal Products Ltd case, upheld by the Andhra Pradesh High Court.

The Tribunal examined the judgments cited and found that supplies to SEZ by DTA units qualify as exports under Section 2(m) of the SEZ Act. The anomaly in Rule 6(6)(i) was rectified by a substitution, treating SEZ developers equally with SEZ units. The Tribunal agreed that the substitution was clarificatory and retrospective. Regarding limitation, the Tribunal disagreed with the Commissioner's findings, noting that the Appellant followed the CBEC circular, and the clearances were known to the department. Citing the Sujana Metal Products Ltd case upheld by the Andhra Pradesh High Court, the Tribunal ruled the duty demand, interest, and penalty were unsustainable both on merits and limitation grounds.

Therefore, the Tribunal set aside the Order-in-Original, allowing the appeal with consequential relief as per law.

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