TaxTMI 
TaxTMI 
2018 (10) TMI 1372
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....Court be pleased to issue a Writ, Order or Direction declaring that the benefit of exemption from Central Excise shall be available to the manufacturer as long as goods are meant to be used for authorized operations and have been cleared, removed or dispatched directly to the SEZ Area from his factory (irrespective of the length and limb of the value chain). Issuing ARE-1 form and (b) Directing the Respondent No.3 to stamp and endorse Form ARE-1 in implementation of the obvious scheme of the SEZ Act that SEZ unit should have tax free goods. (c) Allow the petitioner to claim refund from Respondent No.1 of Central excise duties already reimbursed by the Petitioner to the manufacturers like Respondent No.5 and 6, through its vendors like Respondent No.4. (d) this Hon'ble Court be pleased to issue Writ of Mandamus or a Writ in the nature of Mandamus or any other appropriate Writ, Order or Direction requiring Respondent No. 1 & 2 to take all steps necessary to remove and resolve the dichotomy between the provisions of the SEZ Act and the Rules, if any and/or issue a clarification that the exemption from Central Excise shall be available to sub-contractors; and....
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....ahej. In order to establish such a unit, the petitioner M/s.Siemens A.G has been appointed by M/s.Torrent Energy Ltd., as EPC contractor for off shore supply and services. The petitioner in turn, in order to execute such a contract has appointed one M/s.Simplex Infrastructure Ltd., as a sub contractor. In order to carry out construction and civil works for the SEZ Unit, namely Torrent Energy Ltd., the petitioner as a contractor procures material, namely, steel, bars and cement from the respondent No.5 M/s. Tata Steel Ltd and respondent No.6 Ultratech Cement Ltd. In other words, for instance M/s.Tata Steel Ltd., would supply the steel rods for the purposes of manufacturing or process to be undertaken by the SEZ Unit, namely, Torrent to the subcontractor, respondent No.4 M/s. Simplex Infrastructure Ltd. Simplex Infrastructure while paying for such material would also be paying tax dues, such as excise etc., for such material. The contractor-Siemens who is such a contractor for the SEZ Unit, would receive such raw material from its sub-contractor for being sent to the SEZ Unit directly. On the amount of dues and taxes paid by M/s.Simplex Infrastructure as a subcontractor, when ARE-1 a....
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....directly to the SEZ area from his factory (irrespective of the length and limb of the value chain). Issuing ARE-1 form and (b) Directing the respondent No.3 to stamp and endorse Form ARE-1 in implementation of the obvious scheme of the SEZ Act that SEZ unit should have tax free goods." 4 The petitioner has prayed that the Company is entitled to the benefit of exemption from Central Excise since the goods which the manufacturer had supplied to them, though, through a sub-contractor, are meant to be used for authorized operations and have been cleared, removed or dispatched directly to the SEZ Area from their factory. Merely because the manufacturer's dispatch to the SEZ is linked through a chain of which a sub-contractor is a party, the benefit of exemption from Central Excise should not be denied to the contractor, i.e. the petitioner, since the goods are undisputedly getting to the SEZ area. 5 Mr.K.H.Kaji, learned senior counsel assisted by Mr. Manish Kaji, learned advocate for petitioner, in the background of these facts has drawn our attention to the various provisions of the Special Economic Zones Act, 2005. Drawing our attention to the preamble of the Act, Mr.Ka....
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....ion from duty of customs, under the Customs Act, 1962 (52 of 1962) or the Customs Tarif Act, 1975 (51 of 1975) or any other law for the time being in force, on goods imported into, or service provided, in a Special Economic Zone or a Unit, to carry on the authorised operations by the Developer or entrepreneur; (b) exemption from any duty of customs, under the Customs Act, 1962 (52 of 1962) or the Customs Tarrif Act, 1975 (51 of 1975) or any other law for the time being in force, on goods exported from, or services provided, form a Special Economic Zone or from a Unit, to any place outside India; (c) exemption from duty of excise, under the Central Excise Act, 1944 (1 of 1944) or the Central Excise Tariff Act, 1985 (5 of 1986) or any other law for the time being in force, on goods brought from Domestic Tariff Area to a Special Economic Zone or Unit, to carry on the authorised operations by the Developer or entrepreneur; (d) drawback or such other benefits as may be admissible from time to time on goods brought or services provided from the Domestic Tariff Area into a Special Economic Zone or Unit or services provided in a Special Economic Zone or Unit by t....
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....cks and concessions on the goods and services allowed to a Developer or Co-developer, as the case may be, shall also be available to the contractors including subcontractors appointed by such Developer or Codeveloper, and all the documents in such cases shall bear the name of the Developer or Co-developer along with the contractor or sub-contractor and these shall be filed jointly in the name of the Developer or Codeveloper and the contractor or sub-contractor, as the case may be: Provided also that the Developer or Co-developer, as the case may be, or the Special Economic Zone Unit shall be responsible and liable for proper utilisation of such goods in all cases.] 27. Import and Procurement :- (1) A Unit or Developer may import or procure from the Domestic Tariff Area without payment of duty, taxes or cess or procure from Domestic Tariff Area after availing export entitlements or procure from other units in the same or other Special economic Zone or from Export Oriented Unit or Software Technology Park unit or Electronic Hardware Technology Park unit or Bio-technology Park unit, all type of goods, including capital goods (new or second hand), raw materials, semi-....
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....rea, all types of goods and services, without payment of duty, taxes or cess for creating a central facility for use by Units in Special Economic Zone and where such facility is created for software development, the same may also be accessed by software exporters of Domestic Tariff Area. (6) A gem and jewellery Unit may also source on outright purchase basis or loan basis, gold or silver or platinum through the Nominated Agencies and where such sourcing is on loan basis, the same shall be subjected to the conditions applicable to such transactions under the provisions of the Foreign Trade Policy in force: Provided that the conditions applicable to loan transaction shall not apply where the Unit converts such loan into outright purchase by paying the outstanding loan amount and interest within the period for export prescribed under the Foreign Trade Policy applicable to the loan transaction. (7) the goods already imported or shipped or arrived before the issue of Letter of Approval shall be eligible for duty free clearance provided customs duty has not been paid and goods have not been cleared from Customs or cleared and placed in the Bonded Warehouses. ....
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....fied by the Specified Officer for this purpose, and no examination shall be carried out in the premises of the Unit unless requested by the unit and specifically permitted in writing by the Specified Officer. 30. Procedure for procurement from the Domestic Tariff Area:- (1) The Domestic Tariff Area supplier supplying goods to a Unit or Developer shall clear the goods, as in the case of exports, either under bond or as duty paid goods under claim of rebate on the cover of [Are-1 referred to in Notification number 42/2001- Central Excise (NT), dated 26th June, 2001 and ARE-2 referred to in Notification number 21/2004-Central Excise (NT), dated 6th November 2004] in quintuplicate bearing running serial number beginning from the first day of the financial year. (2) Goods procured by a Unit or Developer, on which Central Excise Duty exemption has been availed but without any availment of export entitlements, shall be allowed admission into the Special Economic Zone on the basis of ARE-1. (3) The goods procured by a Unit or Developer under claim of export entitlements shall be allowed admission into the Special Economic Zone on the basis of ARE-1 and a Bill of ....
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....ms laid down in respect of export goods in cases where the goods are being procured under claim of an export entitlement. (8) Drawbacks or Duty Entitlement Pass Book credit against supply of goods by Domestic Tariff Area supplier shall be admissible provided payments for the supply are made from the Foreign Currency Account of the Unit. [Provided that the reimbursement of duty in lieu of drawback or Duty Entitlement Pass Book credit against supply of goods by Domestic Tariff Area supplier to Special Economic Zone developers shall be admissible even if payment is made in Indian Rupees. Reimbursement of duty in lieu of drawback against supply of goods to Special Economic Zone developer shall be made as per the procedure prescribed by the Central Government.] (9) A copy of the Bill of Export and ARE-1 with an endorsement of the Authorized Officer that the goods have been admitted in full in the Special Economic Zone, shall be treated as proof of export. (10) Where the goods are to be procured by a Unit or Developer from a Domestic Tariff Area supplier who is not registered with the Central Excise authorities, or is a trader or merchant exporter, the....
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.... (12). (15) A Unit or Developer may procure goods and services from another Unit located in the same or any other Special Economic Zone, subject to the following conditions, namely:- (i) the receiving Unit or Developer shall file Bill of Entry for home consumption with the Authorized Officer, in quintuplicate, giving description of the goods along with an invoice and packing list for assessment; (ii) on the basis of such assessed Bill of Entry, the goods shall be allowed to be transferred to the receiving Unit or Developer under transshipment permit; (iii) there shall be no requirement to file any additional documents or bond(s) for the purpose of transshipment of goods and the transshipment permission shall be stamped on the Bill of Entry itself; (iv) the supplying Unit shall submit the re-warehousing certificate to the Specified Officer having jurisdiction over the supplying unit within forty five days, failing which the Specified Officer of the supplying Unit shall write to the Specified Officer having jurisdiction over the receiving Unit or Developer for demand of duty from the receiving Unit or Developer. (v) where the supp....
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....ilar lines as that of Rule 10 except the fact that the word "sub-contractor" is missing. 8.4 Rule 30 provides for the procedure that supplier of goods supplying goods to Unit has to follow. The Unit or a Developer can claim exemption from Excise Duty on submission of ARE Form prepared by a manufacturer or a supplier. On such ARE Form, the Specified Officer has to make an endorsement that the goods have been admitted in full into the Special Economic Zone. 9 According to Mr.Kaji, when the provisions of the Special Economic Zones as reproduced herein are read in context of the Rules, it is undisputed that the seller of the goods, the supplier namely the respondents No. 5 and 6 supply such goods directly to a Special Economic Zone Unit. The supply of such goods is undertaken to the Special Economic Zone Unit by the Sub-contractor, i.e. respondent No.4 on behalf of the petitioner-contractor for being used by the Developer or the Unit which is a Unit in a Special Economic Zone. Pressing into service provisions of Section 7 and Section 26 of the Act, it is Mr.Kaji's submission that once it is undisputed that the goods or services are procured from the Domestic Tariff Area by the Sp....
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.... taxes or cess is not available to such contractor. In the case on hand, what is apparent is that the goods were not procured by the Unit or by the appointed contractor from the manufacturer i.e. Tata Steel, but were procured by respondent No.4 M/s.Simplex Infrastructures Ltd., who is neither a Unit nor an appointed contractor of the Unit, and merely because the purchase made by M/s. Simplex Infrastructures Ltd., are subsequently transferred to the Special Economic Zone, such supply of goods by the manufacturer to the Unit would not be entitled to exemption from Central Excise. The action of the Specified Officer of not endorsing the ARE-1 so as to enable the petitioner to claim exemption is in accordance with the provisions of the Act. Exemption conferred under Section 26 is subject to fulfillment of conditions. Rule 27 and 30 specifically provide that certain conditions need to be complied with for filing of ARE-1 and in absence of such a compliance merely because the petitioner had to reimburse the excise duty billed to the respondent No.1, the petitioner cannot claim such exemption. 11 Having considered the submissions of learned advocates for the respective parties, from re....
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....osal can be made to the Board to set up an SEZ. When a person establishes an SEZ, who is known as a "Developer" or a "Co-Developer" as defined under section 2(f) and 2(g) of the Act, then who on its approval, allocates space or a built up area or provide infrastructure services to the approved Units in accordance with the agreement entered into by him with the entrepreneurs of such Units. Sec.3(b), section 7, as we have seen earlier, provide that any goods or services, exported out of, or imported into, or procured from the Domestic Tariff Area by either a Unit or a Developer, be exempt from payment of taxes, duties or cess under all enactments specified in the first Schedule. Chapter III provides for constitution of Board of Approval. Duties and powers of the Board are to ensure orderly development and to promote Special Economic Zones. Development Commissioner of an SEZ is an Ex-Officio Member of the Board who is the nodal officer of an SEZ appointed to carry out functions under chapter IV of the Act. Chapter V provides for constitution of the Approval Committee which functions for various purposes under the Board's supervision. A person who intends to set up a Unit in an SEZ nee....
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....which Entrepreneur and Developer shall be entitled to Exemptions, Drawbacks and Concessions. Rule 27 here provides that a Unit or a Developer may import or procure from the Domestic Tariff Area several items such as rawmaterials, semi-furnished goods etc. The proviso here suggests that exemptions from payment of duty, taxes or cess, drawbacks and concessions on all types of goods and services, required for setting up and maintenance of factory buildings, allowed to a Unit shall also be available to the contractors appointed by such unit and all the documents in such cases shall bear the name of the Unit along with the Contractor and these shall be filed jointly in the name of the unit and the contractor. 15 Rule 34 reads about utilization of goods admitted into the Special Economic Zone. According to this Rule, the goods admitted to the SEZ shall be used by the Unit or the Developer only for carrying out authorized operations, but if such goods are utilized for purposes other than for such operations, or if the Unit or the Developer fails to account for goods as provided under the Rules, duty shall be chargeable on such goods as if these goods have been cleared for home consumpt....