Domestic Tariff Area to SEZ supply treated as export, preserving refund of accumulated CENVAT credit.

Supply of excisable goods from the Domestic Tariff Area to a Special Economic Zone is treated as export under the SEZ framework, because the Special Economic Zones Act, 2005 and Rules, 2006 give overriding effect and recognise such movement as export for authorised operations. On that basis, refund of accumulated CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 remains available, and the corresponding rebate benefit is also preserved. The analysis further notes that binding Board circulars must be followed by departmental officers. Applying these principles, the refund granted to the assessee was held sustainable.

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Issues: Whether clearance of excisable goods from the Domestic Tariff Area to a Special Economic Zone qualifies as export so as to entitle the assessee to refund of accumulated CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004, and whether the order allowing such refund required interference.

Analysis: The circular issued by the Central Board of Excise and Customs clarified that supplies from the Domestic Tariff Area to a Special Economic Zone are to be treated as export and that the benefit of rebate under Rule 18 of the Central Excise Rules, 2002 and refund of accumulated CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 remains available. The statutory scheme under the Special Economic Zones Act, 2005 and the Special Economic Zones Rules, 2006 recognizes such supply as export, gives the Act overriding effect, and treats the Special Economic Zone as outside the customs territory of India for authorized operations. The decision also followed the binding nature of Board circulars on departmental officers, as well as the view of higher courts that movement of goods from the Domestic Tariff Area to a Special Economic Zone is export.

Conclusion: The assessee was entitled to refund of accumulated CENVAT credit, and the order allowing the refund was sustainable.

Ratio Decidendi: Supply of goods from the Domestic Tariff Area to a Special Economic Zone is to be treated as export for the purpose of refund of accumulated CENVAT credit, and binding departmental circulars on the point must be followed.

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