Reversal of Cenvat Credit

[RAKESH R]

Reg: supplies to SEZ by Merchant Exporter under Rule 19 of CE Rule. As per SEZ Act, Rules, supplies to SEZ Deveopers are considered as 'Export' and the procedure presribed under Notifiction issued under Rule 19 of CE 2002. to be followed. Consequent to circular dated 3.4.08 issued by Director General of Export Promotion, Ministry of Finance, The Excise Officers are insisting for reversal of cenvat credit used on the goods cleared and supplied to SEZ Developer. (Refer para 4(10) of the said circular). I am of the view that this is contrary to the SEZ Act / SEZ Rules and Cenvat Credit Rule.Rule 5 of Cenvat Credit Rule, 2004 allows to retain the credit, the demand of reversal in terms of Rule 6(6) of CCR, 2004 is not correct. The same rule allows the benefit if cleared for export under CE Rules. Please give your expert opinion.

regards

s. gokarnesan

AI Summary

Debate on Reversal of Cenvat Credit for SEZ Developer Supplies Under Rule 19 of Central Excise Rules A discussion on the reversal of Cenvat Credit for supplies to SEZ Developers under Rule 19 of the Central Excise Rules was initiated. The issue arose following a circular from the Director General of Export Promotion, which required reversal of Cenvat Credit for goods supplied to SEZ Developers. The initiator argued this contradicted the SEZ Act, SEZ Rules, and Cenvat Credit Rules, particularly Rule 5. Respondents supported this view, stating that supplies should be treated as exports, thus allowing Cenvat Credit retention under Rule 5 of the Cenvat Credit Rules, 2004.