2016 (10) TMI 113 - HC - Central Excise

Court upholds 'exports' classification for supplies from DTA to SEZ under CENVAT Credit Rule 2004

The court dismissed the appeal challenging the classification of supplies from a DTA unit to SEZ developer/promoter as 'exports' under Rule 6(6) of the ... Whether the Hon'ble CESTAT was right in holding the supplies made from DTA unit to SEZ developer/promoter as 'exports' entitled for the exceptions provided under Rule 6 (6) of the CENVAT Credit Rule 2004, Whether the Tribunal was right in applying the overriding effect of Section 51 of the SEZ Act, 2005 to hold the impugned goods as ''exports'' and at the same time ignoring the provisions of (c) of sub section (1) of Section 26 of SEZ Act, according to which the supplies by domestic units to the units in SEZs/ Developers of SEZ are exempted from payment of Central Excise Duties and Whether the Hon'ble CESTAT was correct in holding that the amendment to Rule 6(6)(i) of Cenvat Credit Rules, 2004 vide Notification No.50/2008 CE (N.T) dated: 31.12.2008 shall be applicable with retrospective effect, when the Ministry/Board vide its Circular No. 267/52/2008-CX dated: 07.01.2009 has clarified that the amendment is prospective in nature and would apply to supplies cleared from the date of the notification only. Held that:- as the issue raised in the present appeal has already been gone into by three different High Courts and the opinion expressed is against the revenue and in favour of the assessees, for the reasons assigned in those judgments, we deem it appropriate to follow the same to maintain consistency as the Central Excise Act is a Central Statute. Accordingly no substantial question of law arises. - Decided against the Revenue Issues:1. Whether supplies made from DTA unit to SEZ developer/promoter can be considered as 'exports' under Rule 6 (6) of the CENVAT Credit Rule 2004Rs.2. Whether the overriding effect of Section 51 of the SEZ Act, 2005 applies to classify the impugned goods as 'exports' while ignoring Section 26 provisionsRs.3. Whether the amendment to Rule 6(6)(i) of Cenvat Credit Rules, 2004 is applicable with retrospective effectRs.Analysis:Issue 1:The appeal questioned the classification of supplies from a DTA unit to SEZ developer/promoter as 'exports' under Rule 6 (6) of the CENVAT Credit Rule 2004. The Hon'ble CESTAT's decision was challenged, which was based on the interpretation of relevant rules and exceptions. The court deliberated on the nature of these supplies and their eligibility for exceptions under the CENVAT Credit Rule.Issue 2:The second issue raised was regarding the application of Section 51 of the SEZ Act, 2005 in determining the status of the impugned goods as 'exports.' The court considered whether this section's overriding effect was correctly applied while possibly overlooking the provisions of Section 26 of the SEZ Act. The interpretation of these statutory provisions was crucial in deciding the tax implications of the transactions in question.Issue 3:The final issue revolved around the retrospective application of an amendment to Rule 6(6)(i) of the Cenvat Credit Rules, 2004. The court analyzed whether the said amendment, as per Notification No.50/2008 CE (N.T) dated 31.12.2008, should be given retrospective effect. The interpretation of this retrospective application was significant in determining the tax liabilities arising from the supplies made under the amended rule.The court referenced similar cases decided by different High Courts, where the issue was examined and ruled in favor of the assessees. Considering the consistency in these judgments and the interpretation of central statutes, the court dismissed the appeal, stating that no substantial question of law arose in the present case. The decision highlighted the importance of maintaining consistency in legal interpretations, especially concerning central statutes like the Central Excise Act.