Custom, Excise & Service Tax Tribunal
M/S. Akzo Nobel Coatings (India) Pvt Ltd vs Commissioner Of Central Excise, ... on 14 December, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/2696/2011-SM [Arising out of Order-in-Appeal No. 28/2011 dated 24/08/2011 passed by the Commissioner of Large Tax Payer Unit (Appeals), Bangalore.] M/s. AKZO NOBEL COATINGS (INDIA) PVT LTD NO.62A, HOSKOTE INDUSTRIA AREA, BANGALORE 562114 Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax BANGALORE-LTU 100 FT RING ROAD JSS TOWERS, BANASHANKARI-III STAGE, BANGALORE 560 085. KARNATAKA Respondent(s)
Appearance:
Mr. B.N GURURAJ, Advocate 22/2, 3 RD MAIN ROAD CHAMARAJPET, BANGALORE.
KARNATAKA For the Appellant Dr. J. Harish, AR For the Respondent Date of Hearing: 14/12/2016 Date of Decision: 14/12/2016 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 21398 / 2016 Per : S.S GARG The present appeal is directed against the impugned order dated 24.8.2011 passed by the Commissioner (A) vide which the Commissioner (A) has dismissed the appeal of the appellant and upheld the Order-in-Original.
2. Briefly the facts of the case are that appellant is engaged in the manufacture of excisable goods i.e., industrial paints, thinner and powder coating resins falling under Chapter Heading 32089029, 38140010 and 39073090 of Central Excise Tariff Act (CETA), 1985 and are availing CNEVAT credit on inputs, capital goods and input services under CENVAT Credit Rules (CCR), 2004. The appellant has been clearing final goods for export and for SEZ unit/SEZ developer without payment of duty against Letter of Undertaking. The Department issued a show-cause notice dated 30.4.2010 proposing to recover 10% of the value of excisable goods supplied to SEZ developer under proviso to Section 11A of Central Excise Act, 1944 read with Rule 14 of the CCR, 2004; interest under Section 11AB read with Rule 14 of the CCR, 2004 and also proposed penalty under Section 11AC read with Rule 15(2) of CCR, 2004 on the allegation that the appellant have not maintained separate accounts for dutiable goods nor have paid 10% amount on the supplies made to SEZ developer under Rule 6(3)(b) of CCR, 2004. Thereafter the original authority confirmed the demand and aggrieved by the same, the appellant filed appeal before the Commissioner (A), who also upheld the Order-in-Original and rejected the appeal. Aggrieved by the said order, the appellant have filed the present appeal.
3. Heard both the parties and perused the records.
4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same is opposed to the provisions of law as well as the judgments rendered by the higher judicial fora. He further submitted that the benefits available to SEZ equally apply to developer of SEZ. Throughout the SEZ Act, 2005 and SEZ Rules, 2006, SEZ developer has been treated at par with the SEZ and no disparity can exist between them. He further submitted that the Department of Revenue has issued Notification No.50/2008 dated 31.12.2008 to incorporate developer in the Rule 6(6)(i) of CCR, 2004 and argued that the amendment to Rule 6 of CCR, 2004 is clarificatory in nature and it is for the previous period also. He further submitted that this issue is no more res integra and has been settled by the jurisdictional High Court of Karnataka in the case of Commissioner of Central Excise vs. Fosroc Chemicals India Pvt. Ltd.: 2015 (318) ELT 240 (Kar.).
5. In the appeal before the Honble High Court filed by the Revenue, the Honble High Court has framed the following question for consideration which is in para 4 of the said decision and is reproduced herein below:
4. The question that arises for our consideration in these appeals are whether the Third amendment of 2008 to the Cenvat Credit Rules, 2004 extending the benefit of exemption from reversal of Cenvat Credit on inputs used for manufacture in case of excisable goods, removed without payment of duty which are either cleared to a unit in a special economic zone or to a developer of a special economic zone for their authorized operation, is to be construed as prospective in operation or retrospective?
Further the Honble High Court has also considered Rule 6 of CCR, 2004 before its amendment and after amendment. The Honble High Court has finally come to the conclusion and has held that the said amendment has to construe retrospective in nature and the benefit of Rule 6(6)(i) as amended in 2008 has to be extended to the goods cleared to a developer by a SEZ for their authorized operations. Thereafter the Honble High Court dismissed the appeal of the Revenue and the substantial question of law was answered in favour of the assessee and against the Revenue. In view of the ratio of the aforesaid judgment, the impugned order is not sustainable in law and the same is set aside with consequential relief, if any.
(Operative portion of the Order was pronounced in Open Court on 14/12/2016.) S.S GARG JUDICIAL MEMBER rv 4