The Customs Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, ruled that clearances made by the appellant without payment of duty, to SEZ Developers are considered as export, hence not required to reverse 10% of the value of such clearances to SEZ Developers.
The Ruling was made in the case of M/s. Ravin Cables Ltd. Vs.Commissioner of Central Excise, Pune-III by a bench consisting of Hon’ble Dr. D.M. Misra, Member (Judicial) and Hon’ble Mr. Sanjiv Srivastava, Member (Technical).
According to the fact, during the relevant period, the appellant had manufactured and cleared insulated wires and cables to SEZ Developers without payment of duty. The Revenue argued that the clearances are hit by Rule 6 of the Cenvat Credit Rules 2004. As being exempted goods, the appellant was required to reverse 10% of the value of such clearances.
The Appellants argued that during the relevant period, the clearance is covered under Rule 6(6) (v) the Cenvat Credit Rules(CCR) 2004 and are considered as export. Consequently, the Appellant argued that they are not required to reverse 10% of the value of such clearances to SEZ Developers.
The Appellant cited various cases including Sujana Metal Products Ltd. vs. CCE, Hyderabad later upheld by the Hon’ble Andhra Pradesh High Court; S.P. Fabricators Pvt. Ltd. vs. CCE, Belapur; Blue Star Ltd. vs. CCE, Thane; and CCE, Bangalore-III vs. Lotus Power Gears (P) Ltd.
The Tribunal, however, considered the Sujana Metal Products Ltd. Case and summarised that for the period up to 9-2-2005, the supplies made to SEZ units are to be treated as export both for extending export benefits and for levy of duty in terms of SEZ provisions contained in Chapter XA of the Customs Act. The Tribunal further observed that supplies made to SEZ from DTA units shall be treated as export. Consequently, the Tribunal elaborated that, the provisions of Cenvat Credit Rules for recovery of amounts on goods supplied to SEZ units is not applicable.
The Tribunal also added that “exception provided under Rule 6(6) of Cenvat Credit Rules, 2004 shall be applicable to supply of exempted goods both to SEZ units and SEZ developers/promoters”.
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