Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise vs Jsw Severfield Structures Ltd on 21 September, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/26645/2013-SM [Arising out of Order-in-Appeal No. 38/2013/BM dated 13/03/2013 passed by the Commissioner of Central Excise, Mysore] For approval and signature: HON'BLE SHRI S.S GARG, JUDICIAL MEMBER 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 Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Commissioner of Central Excise No. 71, Club Road, Belgaum 590 001 Appellant(s) Versus JSW Severfield Structures Ltd. Near 10 MT Gate, Beside Cement Plant II, Vidya Nagar, Torangallur, Bellary Respondent(s)
Appearance:
Shri Parashiva Murthy, AR For the Appellant Shri M.S. Nagaraj, Advocate For the Respondent Date of Hearing: 19/09/2016 Date of Decision: 21/09/2016 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 20806/ 2016 Per: S.S GARG The present appeal is directed against the impugned order passed by the Commissioner (Appeals) vide order dated 13.03.2013 vide which he allowed the appeal of the respondent by setting aside the Order-in-Original. Briefly the facts of the case are that the respondents are registered with the Central Excise Department and engaged in the manufacturing of Fabricated Steel Structure falling under Chapter 94 and goods falling under Chapter 73 of Central Excise Tariff Act, 1985 and availing the cenvat credit of duty paid on inputs, capital goods and service tax paid on input services under provisions of Cenvat Credit Rules, 2004. The respondents by supplying the fabricated steel structure to M/s. Torrent Energy Ltd. which is a SEZ unit during the period in dispute. The respondent had filed refund claim of unutilized accumulated cenvat credit in respect of clearances of goods made to SEZ unit during the period in dispute under Rule 5 of the Cenvat Credit Rules, 2004. The adjudicating authority vide Order-in-Original held that Rule 5 is not admissible for refund of the unutilized cenvat credit in respect of DTA unit on clearances made to SEZ Unit and hence rejected the refund claims in terms of Section 2(18) of Customs Act, 1962 read with Rule 5 of Cenvat Credit Rules 2004. Aggrieved by the said order, the respondent filed appeal before the Commissioner (Appeals) who vide his order dated 13.03.2013 allowed the appeal. Aggrieved by the said order, the Revenue has filed the present appeal.
2. Heard both the parties and perused the records.
3. The learned AR submitted that the impugned order is not sustainable in law. He further submitted that in this case refund claim is filed based on supplies of fabricated structural items made from DTA to SEZ unit considering them as exports but in fact they are not exports but the same are deemed exports. SEZ Act is a special legislation which is intended to benefit only to SEZ units. The provisions of SEZ Act are considered as means which convey such benefits to SEZ units and the definition of exports furnished under Section 2(m) of SEZ Act, 2005 and the various related provisions of the Act has to be considered in this perspective. He further submitted that the refund of unutilized cenvat credit under Rule 5 of Cenvat Credit Rules 2004 is not admissible to DTA unit on clearances made to SEZ units, the deeming fiction of export under SEZ Act, 2005 is exclusively meant for benefit of SEZ units and the DTA units cannot claim them.
4. On the other hand the learned counsel for the respondent submitted that the supplies made to SEZ are considered as physical export for all the purposes. He further submitted that as per Section 2(m) of SEZ Act, 2005 the supplies made to the unit in SEZ are covered under the definition of Export and SEZ is treated as located outside India and hence the supplies made to SEZ unit are export. As per SEZ Rules 2006, in Rule 23 it is provided that supplies made from DTA to SEZ unit shall be eligible for export benefits as admissible under the Foreign Trade Policy. Further as per Circular No. 29/2006-Cus. dated 27.12.2006, the CBEC clarified that the supplies made to SEZ shall be eligible for exemption from duty under Rule 19 and also for rebate under Rule 18 of the Central Excise Rules, 2002. It was also clarified that all the provisions relating to exports under the Central Excise Act 1944 and Rules made thereunder may be applied, mutatis mutandis, in case of procurement by SEZ unit from DTA. In support of his submission, he relied upon the CBEC Circular No. 1001/8/2015-CX.8 dated 28.04.2015 and decision in the case of Sirmaxo Chemicals Pvt. Ltd. Vs. CCE, Thane-II reported in 2016 (337) E.L.T. 425 (Tri.-Mumbai). In CBEC Circular dated 28.04.2015 in para 3 and 4 the Board has stated as under:
3. It can thus be seen that according to the SEZ Act, supply of goods from DTA to the SEZ constitutes export. Further, as per Section 51 of the SEZ Act, the provisions of the SEZ Act shall have over riding effect over provisions of any other law in case of any inconsistency. Section 53 of the SEZ Act makes an SEZ a territory outside the customs territory of India. It is in line of these provisions that Rule 30(1) of the SEZ Rules, 2006 provides that the DTA supplier supplying goods to the SEZ shall clear the goods either under bond or as duty paid goods under claim of rebate on the cover of ARE-1.
4. It was in view of these provisions that the DGEP vide Circulars No. 29/2006-Customs, dated 27-12-2006 [2007 (207) E.L.T. (T35)] and No. 6/2010, dated 19-3-2010 [2010 (251) E.L.T. (T44)] clarified that rebate under rule 18 of the Central Excise Rules, 2002 is admissible for supply of goods made from DTA to SEZ. The position as explained in there circulars does not change after amendments made vide Notification No. 6/2015-C.E. (N.T.) and 8/2015-C.E. (N.T.) both dated 1-3-2015, since the definition of export, already given in Rule 18 of Central Excise Rules, 2002 has only been made more explicit by incorporating the definition of export as given in the Customs Act, 1962. Since SEZ is deemed to be outside the Customs territory of India, any licit clearances of goods to an SEZ from the DTA will continue to be export and therefore be entitled to the benefit of rebate under Rule 18 of CER, 2002 and of refund of accumulated CENVAT credit under rule 5 of CCR, 2004, as the case may be. 4.1. The ratio of the judgment relied upon by the learned counsel for the respondent squarely applies in the present case also. Therefore keeping in view the Boards Circular cited supra as well as the judgment cited above, it is clear that in respect of supplies made to SEZ unit, it shall be eligible for all benefits available under the Central Excise Act 1944 and Rules made thereunder. Therefore there is no infirmity in the order passed by the Commissioner (Appeals) which warrants interference by the Tribunal. Therefore I upheld the impugned order and dismiss the appeal of the Revenue.
(Order pronounced in open court on 21.09.2016) (S.S GARG) JUDICIAL MEMBER iss