Deemed exports to SEZ count as exports for CENVAT refund under Rule 5, subject to verification of credits.

Clearances to SEZ on a deemed export basis are treated on par with physical exports for refund under Rule 5 of the CENVAT Credit Rules, 2004, because the rule does not create a distinction between the two. The Tribunal followed binding precedent that refund cannot be denied merely because the clearances are deemed exports and applied the view that supplies to SEZ for authorised operations are in the nature of exports. Eligible refund must therefore include such clearances, subject to verification of the export quantum and debit in the CENVAT account.

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Issues: Whether clearances made to SEZ on a deemed export basis are to be treated on par with physical exports for grant of refund under Rule 5 of the CENVAT Credit Rules, 2004.

Analysis: The refund claim was rejected on the premise that deemed exports were different from physical exports. The Tribunal noted that Rule 5 of the CENVAT Credit Rules, 2004 does not draw such a distinction. Relying on the binding precedent applying the principle that refund cannot be denied merely because the clearances are treated as deemed exports, and following the view that clearances to SEZ for authorised operations are in the nature of exports, the Tribunal held that deemed exports must be counted while computing eligible refund. The claim remained subject to verification of the quantum of exports and debit in the CENVAT account.

Conclusion: Deemed exports to SEZ are to be treated on par with physical exports for refund under Rule 5, and the Revenue's appeal fails.

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