Retrospective Cenvat credit relief for SEZ developer supplies upheld as a clarificatory amendment

The amendment to Rule 6(6)(i) of the Cenvat Credit Rules, 2004 was treated as clarificatory and therefore retrospective, because the SEZ Act, 2005 deems supplies from the Domestic Tariff Area to an SEZ Unit or Developer as exports and prevails over inconsistent law. The omission of the word "developer" in the pre-amendment rule was regarded as a defect cured by substitution to remove doubt, so the benefit of the rule was held available to clearances made to an SEZ developer for authorised operations.

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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 clarificatory and retrospective so as to extend the benefit to clearances made to a Special Economic Zone developer for authorised operations.

Analysis: The Court followed its earlier decision holding that the Special Economic Zones Act, 2005 treats supplies from the Domestic Tariff Area to a Unit or Developer as exports, that the SEZ enactment overrides inconsistent provisions of other laws, and that the omission of the word "developer" in the pre-amendment rule was cured by a substitution brought to remove doubt. The amendment was therefore construed as clarificatory in nature and operative from inception for purposes of supplies to SEZ developers for authorised operations.

Conclusion: The amendment was held to be retrospective and the benefit of Rule 6(6)(i) was held available to goods cleared to an SEZ developer.

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