2017 (1) TMI 213

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... cement to the units, which are situated in Special Economic Zone, without payment of duty. The clinker was captively used in the production of cement and was exempted from payment of duty vide Notification No.67/95-CE dated 16.03.05 provided the final product (Cement) is cleared on payment of duty. Since in the present case, cement is cleared without payment of duty to SEZ s unit, proceedings were initiated against the appellant to demand duty on such clinker used in the manufacture of cement within the unit. The Original Authority confirmed the demand of Rs. 4,07,91,300/- and imposed equal amount of penalty. 3. Ld. Counsel for the appellant submitted that the demand arose mainly on the understanding that the SEZ is not mentioned in the....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..... It is contended that the very purpose of the non-inclusion of SEZ in Notification No.67/95 is to make it apply only to FTZ and not to SEZ. We are unable to accept departments the view for the reasons that during the relevant period under dispute there were no FTZ in operation and if the Revenues view is to be taken, no clearance would be made to FTZ after the enactment of SEZ Act with effect from 10.02.2006. Once the SEZ Act came into effect from 10.02.2006 all the units functioning as FTZ were declared as SEZ units. We find that the Notification No.4/2003-CE, dated 30.03.2003 was issued to convert various FTZs into SEZs. 33. Further as per the Notes Explaining Clauses of the Finance Bill, 2007 clause 106, after enactment of SEZ ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....termediate product is otherwise also hit by Revenue neutrality, as the appellants are otherwise entitled to avail the Cenvat credit of the duty, if any paid on clinker. Alternatively, if a manufacturer avails exemption on intermediate product under Notification 67/95-CE and chooses to pay duty on the cement when cleared to SEZ unit/developer, the duty paid on final product will be fully available to him as refund/rebate. Thus, on both counts the issue is purely revenue neutral. It is not the intention of the government to demand duty on the intermediate product having considered that the supplies to SEZ are exports. Therefore, the demand of duty on the intermediate product clinker used in manufacture of cement supplied to SEZ units/develope....