Custom, Excise & Service Tax Tribunal
) M/S Sujana Metal Products Ltd vs ) The Commissioner Of Central Excise on 5 October, 2011
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench - Division Bench
Court - I
Date of Hearing: 05.10.2011
Date of decision: 05.10.2011
Appeal Nos. E/936/2009, E/2288/2010/2010 & E/1966/2010
(Arising out of Orders-in-Appeal No. 13/2009-CE dated 10.08.2009, 41/2010 (H-I) CE dated 28.07.2010, 28/2010 (H-I) CE dated 31.05.2010 passed by the Commissioner of Customs, Cochin)
For approval and signature:
Honble Mr. P.G. Chacko, Member (Judicial)
Honble Mr. M. Veeraiyan, Member (Technical)
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3. Whether their Lordship wish to see the fair copy of the Order?
Seen
4. Whether Order is to be circulated to the Departmental authorities?
Yes
1) M/s Sujana Metal Products Ltd.
2) The Commissioner of Central Excise
Hyderabad
3) -do-
..Appellant(s)
Vs.
1) The Commissioner of Central Excise
Hyderabad
2) M/s. Dhanalaxmi Iron Industries Ltd.
3) M/s Alumeco India Extrusions Ltd. Respondent(s)
Appearance Mr. B.V. Kumar, Mr. R.K. Singla and Mr. Ganesh Haavanur, Advocate and DR for the appellants Mr. Ganesh Haavanur and Mr. G. Shiva Dass, DR and Advocate, for the respondents Coram:
Honble Mr. P.G. Chacko, Member (Judicial) Honble Mr. M. Veeraiyan, Member (Technical) FINAL ORDER Nos._______________________2011 Per: M. Veeraiyan 1.1. Appeal No. E/936/2009 is by M/s. Sujana Metal Products Ltd. against the order of the Commissioner dated 10.08.2009 by which an amount of Rs. 1,61,35,168/- relating to the period April 2008 to November 2008 along with interest stands demanded and a penalty of Rs. 35,00,000/- imposed.
1.2. Appeal No. E/2288/2010 is by the department against the order of the Commissioner (Appeals) No. 41/2010 (H-I) CE dated 28.07.2010 by which, the order of the original authority, confirming a demand of an amount of Rs. 3,23,334/- relating to the period 11.04.2007 to 02.01.2008 along with interest and imposing penalties, was set aside.
1.3. Appeal No. E/1966/2010 is against the order of the Commissioner (Appeals) No. 28/2010 (H-I) CE dated 31.05.2010 by which order of the original authority confirming demand of an amount of Rs. 39,87,428/- relating to the period 01.08.2007 to 30.04.2008 along with interest and imposing penalty of Rs. 2,00,000/- stands set aside.
1.4. All these appeals involve identical issue and, therefore, they are dealt with by this common order.
2. Heard both sides.
3. The assessees have supplied excisable goods to the developers/promoters of SEZ during the above period and the department was of the view that such supplies made to developers/promoters of SEZ are exempted from payment of duty and, therefore, the assessees were manufacturing both dutiable and exempted final products and that they have not maintained separate accounts/inventory of inputs used in the manufacture of exempted products and, therefore, they were required to pay 10% of value of the exempted goods supplied to SEZ developers in terms of Rule 6 of CENVAT Credit Rules 2004. In the case of Sujana Metal Products Ltd. Commissioner has upheld the demand and imposed penalties as mentioned above. In other two cases, the original authority confirmed the demands and imposed penalties but the Commissioner (Appeals) has set aside the orders of the original authority and hence the department has filed the appeals.
4. Both sides agree that the issue involved regarding applicability of Rule 6 of the CENVAT Credit Rules 2004 in the above situation stands decided by the Tribunal in the case of Sujana Metal Products Ltd. (Appellant in E/936/2009) and Others as reported in 2011-TIOL-1173-CESTAT-BANG. In this regard relevant portions of the said order is reproduced below:
6.1. We have carefully considered the submissions from both sides and perused the records. In all these cases, the assessees have supplied the excisable goods without payment of duty to developers / promoters of SEZ. There is no dispute that the SEZ developers / promoters were entitled to get the goods supplied by the manufacturers in DTA without payment of duty. There is also no dispute that when exempted goods are supplied to SEZ units, the exception under Rule 6(5) of Cenvat Credit Rules, 2002 and Rule 6(6) of Cenvat Credit Rules, 2004 shall apply. In the context of applying the exceptions in the said Rules, the dispute relates to the "status" of goods supplied by the DTA units to the SEZ developers / promoters as to whether the same is to be treated as "goods exported" or otherwise, whether such supplies are to be treated as "dutiable goods" or as "exempted goods".
6.2. If the goods are treated as exported, then exception under Rule 6(5) of the Cenvat Credit Rules, 2002 and Rule 6(6) of Cenvat Credit Rules, 2004 shall apply.
6.3. If clearances are treated as clearance of dutiable goods, then Rule 6 of the Cenvat Credit Rules, 2002 and Cenvat Credit Rules, 2004 shall not apply. On the other hand, if they are treated as clearance of exempted goods, then the said Rules apply, subject, further to the exceptions provided therein.
..
7.7. Viewed in this background, the SEZ provisions contained in Chapter XA of the Customs Act clearly treated goods admitted to SEZ as export not only for grant of export benefits but also for levying of export duties. In view of the above, the goods admitted to SEZ from DTA has to be treated only as exports till 9/2/2006 when the said provisions were in vogue.
.
8.4. In the light of the above and in view of the overriding effect of Section 51 of the SEZ Act, the supplies made by DTA units to SEZ units will amount to export for the purpose of all export benefits. The benefit shall include benefits available in respect of exports provided by exception to Rule 6 of Cenvat Credit Rules, 2004.
..
11. In the present case, taking into account the provisions of the erstwhile SEZ in chapter XA of the Customs Act, the provisions in the SEZ Act and the clarifications of the Board (except the clarification dt. 7/1/2009), it is apparent that the intention was to make available the benefits to SEZ developer for the authorized operations in addition to SEZ units and therefore the amendment No.50/2008-CE(NT) dt. 31/12/2008 Cenvat Credit Rules, 2004 is applicable retrospectively. However, as the amendment by No.50/2008 is only to Rule 6 of Cenvat Credit Rules, 2004, the question of extending the benefit of amendment to Cenvat Credit Rules, 2002 does not arise.
12. As the issues involved relate to interpretations of SEZ provisions under the Customs Act, SEZ Act and provisions of the Central Excise Rules and the Cenvat Credit Rules, no charge of suppression by the assessees can be sustained and, therefore, the question of invoking the extended period of limitation and also imposing penalties does not arise.
13. From the above, the following emerges.
a. For the period upto 9/2/2006, 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.
b. For the period from 10/2/2006, the definition of the term "export" under the Customs Act is not consistent with the definition of the term "export" under the SEZ Act. However, the definition of the term "export" under the SEZ Act shall prevail over the definition of term "export" under the Customs Act. Therefore, supplies made to SEZ from DTA units shall be treated as export.
c. Since both during the period prior to and w.e.f. 10/2/2006, the supplies made to SEZ are held to be "export", the application of provisions of Cenvat Credit Rules for recovery of amounts on goods supplied to SEZ units in terms of Rule 6 of CCR, 2002 / CCR, 2004 does not arise.
d. The amendment to Rule 6(1) of the CCR, 2004 by the amending Notification No.50/2008-CE (NT) dt. 31/12/2008 shall be applicable w.e.f. 10/9/2004 when the CCR, 2004 came into existence and, therefore, 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.
e. Appeals of the assessees deserve to be allowed and the appeals of the Department deserve to be rejected.
f. Incidentally, in the facts and circumstances of the case, the question of invoking extended period of limitation for demand of amounts and imposition of penalties does not arise.
14. Accordingly the appeals of the assessees are allowed with consequential relief as per law and the appeals of the Department are rejected. Cross Objection No.E/CO/02/2010 is also disposed off.
5. As the issues stand settled in favour of the assessee in the above decision of the Tribunal, holding that the exception provided under Rule 6(6) of CENVAT Credit Rules, 2004 shall also be applicable to supply of exempted goods to SEZ developers and promoters we set aside the order of Commissioner and allow the appeal of M/s. Sujana Metal Products Ltd. with consequential relief as per law. We do not find any reason to interfere with the orders of the Commissioner (Appeals) in the other two cases and therefore the appeals of the department are rejected.
(Operative part of this order was pronounced
in court on 05.10.2011)
(M. VEERAIYAN) (P.G. CHACKO)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
iss