In a major relief to ArcelorMittal Nippon Steel India Pvt. Ltd. (Formerly Essar Steel India Ltd.), the Hyderabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that, Cenvat credit is attributable to the inputs used in manufacture of goods exported under bond from a Domestic Tariff Area (DTA) to a Special Economic Zone (SEZ) unit and dismissed the appeal of the Commissioner of Central Tax.
The Cenvat credit claim filed by the assessee but was proposed to be rejected only on the ground of a Special Civil Application being filed by the appellant before Hon’ble High Court of Gujarat on the ground that the words export or import or DTA are defined under the SEZ Act for a specific purpose and the scope thereof would not automatically be extended in other Acts. The said ground was opined to be contradictory to the claim of refund filed by the assessee under Rule 5 of Cenvat Credit Rules, 2004. This led to filing of an appeal before the Commissioner (Appeals) and the order challenged in this appeal was passed in favour of the assessee.
On behalf of the department, A.V.L.N. Chary submitted that refund is otherwise allowed only when a manufacturer is not in a position to utilise the import credit allowed against the goods exported during the quarter to which such refund claim relates to. It was also contended that the Commissioner (Appeals) failed to appreciate the non-availability of the required balance of unutilized Cenvat credit. The delay in considering the refund claim was also attributed to the pendency of the said Special Civil Application before the High Court of Gujarat.
The assessee, represented by Vishal Agarwal and Riya Jindal, claimed that the Rule 5 of the Cenvat Credit Rules, 2004 was strictly complied with and that the issue before the High Court was related to levy of export duty under Customs Act, 1962 which was unrelated. The assessee therefore implied that the pendency of issue before the High Court was not a reasonable ground to delay considering the refund claim.
The Appellate Tribunal, looked into rule 5 of the CCR, 2004 and found that it was sufficiently complied with by the assessee. It was also pointed out that Section 2(m)(ii) of SEZ Act, 2005, ‘export’ means supplying goods, or providing services, from the Domestic Tariff Area (DTA) to a Unit or Developer in the same or in the different SEZ and that as per the Central Government Notification No. 11/2002-Central Excise (N.T.), dated 1st March, 2002, the refund of Cenvat credit shall be allowed in respect of final products cleared to SEZ.
In light of the rule and notification as above, the tribunal comprising P V Subba Rao and Dr. Rachna Gupta upheld the order of the Commissioner (Appeals) and dismissed the appeal of the department in favour of the assessee.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanPremium. Follow us on Telegram for quick updates.
