Karnataka High Court
The Principal Commissioner Of vs M/S Azko Nobel on 20 June, 2018
Bench: Vineet Kothari, S.Sujatha
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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 20TH DAY OF JUNE 2018
PRESENT
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
AND
THE HON'BLE Mrs.JUSTICE S.SUJATHA
C.E.A.No.58/2017
BETWEEN:
THE PRINCIPAL COMMISSIONER OF CENTRAL TAX
GST COMMISSIONERATE, BENGALURU EAST
T.T.M.C. BUILDING, ABOVE BMTC BUS STAND
4TH FLOOR, DOMLUR, BENGALURU-560071.
EARLIER KNOWN AS
COMMISSIONER OF CENTRAL EXCISE
CUSTOMS AND SERVICE TAX
BANGALORE-LTU
100FT RING ROAD JSS TOWERS
BANASHANKARI-III STAGE
BANGALORE-560085
KARNATAKA.
...APPELLANT
(By Mr. JEEVAN J. NEERALGI, ADV.)
AND:
M/S. AZKO NOBEL COATING INDIA PVT. LTD.,
No.62A, HOSKOTE INDUSTRIAL AREA
BENGALURU-562114.
... RESPONDENT
THIS C.E.A IS FILED UNDER SECTION 35G OF THE
CENTRAL EXCISE ACT, PRAYING TO I. ALLOW THE APPEAL OF
THE APPELLANT BY ANSWERING THE SUBSTANTIAL
Date of Judgment 20-06-2018 C.E.A..No.58/2017
The Principal Commissioner of Central Tax
Vs. M/s. Azko Nobel Coating India Pvt. Ltd,
2/8
QUESTIONS OF LAW FRAMED ABOVE IN FAVOUR OF THE
APPELLANT IN THE INTEREST OF JUSTICE AND EQUITY. II.
SET ASIDE THE FINAL ORDER NO.21398/2016 DATED 14-12-
2016 PASSED BY THE CESTAT IN THE INTEREST OF JUSTICE
AND EQUITY. III. PASS SUCH OTHER ORDER AS THIS HON'BLE
Court DEEMS FIT UNDER THE CIRCUMSTANCES OF THE CASE
IN THE INTEREST OF JUSTICE AND EQUITY.
THIS C.E.A. COMING ON FOR ORDERS, THIS DAY
Dr. VINEET KOTHARI J. DELIVERED THE FOLLOWING:-
JUDGMENT
Mr. Jeevan J. Neeralgi, Adv. for Appellant-Revenue Mr.Jeevan J. Neeralgi, learned counsel for the appellant-Principal Commissioner of Central Tax has fairly submitted that the question arising in the present case is covered by the decision of the cognate bench of this Court in the case of Commissioner of C. Ex. & S.T., Bangalore -vs- Fosroc Chemicals (India) Pvt.
Ltd., (2015 (318) E.L.T. 240 (Kar.) in which the cognate bench of this Court has held that the Amendment of Rule 6(6)(i) of Cenvat Credit Rules, 2004, amended in the year 2008, has to be given retrospective effect as it was clarificatory in nature and Date of Judgment 20-06-2018 C.E.A..No.58/2017 The Principal Commissioner of Central Tax Vs. M/s. Azko Nobel Coating India Pvt. Ltd, 3/8 has to be extended to the goods cleared to a "developer"
of a Special Economic Zone for their authorized operation.
2. The relevant portion of the said judgment is quoted below:
"13. The parliament has enacted the Special Economic Zones Act, 2005 (SEZ Act for short) to provide for the establishment, development and management of the Special Economic Zones for the promotion of exports and for matters connected therewith or incidental thereto. Section 53 of the Act declares that a special economic zone shall, on and from the appointed day, be deemed to be a territory outside the Customs territory of India for the purposes of undertaking the authorized operations. The word "export"
has been defined under Act at Section 2(m). According to the definition of the word export, vide Section 2(m)(ii) "export" means supplying goods or providing services, from the Domestic Tariff Area to a Unit or Developer. Such exports were exempted from duty of Date of Judgment 20-06-2018 C.E.A..No.58/2017 The Principal Commissioner of Central Tax Vs. M/s. Azko Nobel Coating India Pvt. Ltd, 4/8 central Excise under Section 26 of the SEZ Act, 2005 and consequently application of Cenvat Credit Rules. Section 151 of the Special Economic Zones Act, 2005, overrides the provision of all other laws for the time being in force, notwithstanding anything inconsistent therein with the provision of the Special Economic Zones Act, 2005. This section therefore overreaches and eclipses the provisions of any other law containing provisions contrary to the SEZ Act, 2005. Though the definition of the word "export" in the SEZ Act, in Sec.2(m) included supply of goods to a "Unit" or "Developer" in clause (i) of sub-rule (6) of the Cenvat Credit Rules, 2004 the word "Developer" was conspicuously missing and only "unit" was included before the 2008 amendment. It is in that context the aforesaid amendment by Notification No.50/2008 C.E. (N.T), dated 31.12.2008 was brought in, to clarify the doubt. As the said amendment is clarificatory in nature, that is the reason why it was brought by way of "substitution". The effect of the said "substitution" is that the Cenvat Rules 2004 Date of Judgment 20-06-2018 C.E.A..No.58/2017 The Principal Commissioner of Central Tax Vs. M/s. Azko Nobel Coating India Pvt. Ltd, 5/8 are to be read and construed as if the altered words had been written into the Rules of 2004 with pen and ink and the words "to a developer of the SEZ for their authorized operation" was there from the inception. This is the understanding of the Government as is also clear from the circular issued by the C.B.E & C. bearing No.29/2006-Cus., dated 27-12-2006 wherein clause 4 reads as under:-
"4. In the light of the aforesaid provisions, with effect from 14-3-2006, Chapter XA of the Customs Act, 1962, the SEZ Rules, 2003, the SEZ (Customs Procedure) Regulations, 2003, and the exemption Notification No.58/2003-C.E., dated 22-7-
2003 regarding the supply of
goods to SEZ units & SEZ
developers have become
redundant. Consequently the
supplies from DTA to a SEZ unit,
or to SEZ developers for their
authorized operations inside a
Date of Judgment 20-06-2018 C.E.A..No.58/2017 The Principal Commissioner of Central Tax Vs. M/s. Azko Nobel Coating India Pvt. Ltd, 6/8 SEZ notified under sub-section (1) of Section 4 of the Act, may be treated as in the nature of exports."
14. Therefore, it is clear, the said amendment has to be construed as 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" of a Special Economic Zone for their authorized operations. Therefore, we do no see any merit in these appeals.
15. The substantial question of law is answered in favour of the assessees and against the Revenue.
16. Accordingly, the appeals are dismissed."
3. The Tribunal, in the present case, in the impugned order dated 14.12.2016 vide Annexure-A, in view of the aforesaid judgment, granted relief to the Respondent-assessee with the following observations:
Date of Judgment 20-06-2018 C.E.A..No.58/2017 The Principal Commissioner of Central Tax Vs. M/s. Azko Nobel Coating India Pvt. Ltd, 7/8
"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.)."
Date of Judgment 20-06-2018 C.E.A..No.58/2017 The Principal Commissioner of Central Tax Vs. M/s. Azko Nobel Coating India Pvt. Ltd, 8/8
4. Having heard the learned counsel for the appellant-Revenue, we are satisfied that the controversy involved in the present case is covered by the decision of the cognate bench of this Court referred supra.
Therefore, no Substantial Question of Law arises for our consideration and the appeal is liable to be dismissed and the same is accordingly dismissed.
Copy of this order be sent to the Respondent-
assessee.
Sd/-
JUDGE Sd/-
JUDGE TL