Unit located in SEZ shall be treated as Distinct Entity: CESTAT quashes Order denying Excise Duty Refund [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has held that for the purpose of refund of the central excise duty, a unit located in a Special Economic Zone (SEZ) shall be treated as a distinct entity for the purpose of Central Excise Act, 1944.

The appellants, Tega Industries Limited entitled for refund in terms of Notification No. 12/13-ST dated 01.07.2013 read with Section 11B of Central Excise Act, 1944 during the period January 2017 to March 2017. The department, however, rejected refund claim on the ground that the service of marketing on which the refund claim was made is not listed in approved list of the approval committee for the Special Economic Zone. Secondly, the appellant and the service provider are one entity hence, it cannot be said that the appellant have received the services from the service provider.

Mr. Ramesh Nair (Judicial Member) has allowed the claim of the assessee by holding that the service is not included in the approved list the refund cannot be denied.

“As regard the contention of the Learned Commissioner (Appeals) that the appellant’s service provider and appellant are same entity. I find that there is no dispute that the appellant’s service provider is located in Kolkata which is a DTA unit and the appellant’s unit is located in SEZ. As per Sub Rule (7) of Rule 19 of the Special Economic Zone Rules, 2006 it clearly provides that if an enterprise is operating both as Domestic Tariff Area Unit as well as a Special Economic Zone Unit, it shall have two distinct identities with separate books of account, but it shall not be necessary for Special Economic Zone unit to be a separate legal entity. With this clear provision under the Special Economic Zone Rules even if the appellant is not a separate legal entity, the unit being located in SEZ shall be treated as distinct identity, therefore, the denial of refund on this ground also not tenable,” the Tribunal held.

Ms. Disha Gursahaney, Advocate appeared for the Appellant-Assessee.

To Read the full text of the Order CLICK HERE

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