Retrospective SEZ exemption for supplies to developers bars Rule 6(3) Cenvat demand on authorised operations.

Clearances of goods to SEZ Developers for authorised operations were treated as covered by the SEZ exemption framework from inception because Notification No. 50/2008-C.E. (N.T.) was held to be clarificatory and retrospective. On that basis, such supplies could not be subjected to demand under Rule 6(3) of the Cenvat Credit Rules, 2004. The Tribunal relied on binding jurisdictional High Court precedent and the related administrative understanding to conclude that the demand was unsustainable and to grant relief to the assessee.

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Issues: Whether clearance of goods to SEZ Developers attracts demand under Rule 6(3) of the Cenvat Credit Rules, 2004, and whether the 2008 amendment extending the benefit to SEZ Developers operates retrospectively.

Analysis: The demand was based on the view that clearance to SEZ Developers was excluded from the pre-amended Rule 6(6)(i). The Tribunal relied on binding jurisdictional High Court precedent holding that the amendment made by Notification No. 50/2008-C.E. (N.T.) was clarificatory and therefore retrospective. The legal effect of substitution was that supplies to SEZ Developers for authorized operations were to be treated as covered from inception, consistent with the SEZ regime and the understanding reflected in the administrative circular relied on in the precedent.

Conclusion: The demand was unsustainable and the issue was decided in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential reliefs as per law.

Ratio Decidendi: A clarificatory substitution extending the SEZ exemption framework to supplies made to SEZ Developers for authorized operations applies retrospectively, and such clearances cannot be subjected to a demand under Rule 6(3) of the Cenvat Credit Rules, 2004.

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