Custom, Excise & Service Tax Tribunal
Trichy Distilleries & Chemicals Ltd vs Commissioner Of Central Excise on 27 October, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI Appeal No.E/477/2010 [Arising out of Order-in-Appeal No.70/2010 dt.29.04.2010 passed by the Commissioner of Customs & Central Excise (Appeals), Trichy] Trichy Distilleries & Chemicals Ltd. Appellant Versus Commissioner of Central Excise, Trichy Respondent
Appearance:
Shri P.C. Anand, Consultant For the Appellant Shri K. Veerabhadra Reddy, JC (AR) For the Respondent CORAM :
Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of hearing / decision : 27.10.2017 FINAL ORDER No. 42591 / 2017 Per Madhu Mohan Damodhar The facts in brief are that appellants are engaged in manufacture of industrial alcohol and chemicals and had cleared Acetic acid, Ethyl Acetate and Anhydride to an unit located in the Special Economic Zone (SEZ) without payment of duty during the period November 2007 to August 2008. The appellants were also availing duty exemption from payment of duty on the intermediate products used captively in the production of final products by Notification No.67/95-CE dt. 16.03.95. The said exemption is not available when the final products are exempted, except when such final products are supplied to (a) unit in FTZ (or) (b) 100% EOU (or) (c) a software technology park (or) (d) an Electronic Hardware Technology Park (or) (e) supplies made under Notification No.108/95-CE, dated 28.08.1995, (f) by a manufacturer of dutiable and exempted final products, after discharging the obligation prescribed in Rule 6 of Cenvat Credit Rules. Department however took the view that duty is payable on intermediate products consumed captively in manufacture of the final products cleared without payment of duty to SEZ, since SEZ unit is not included in circumstances as mentioned (a) to (f) above. In proceedings initiated against the appellant, original authority demanded duty of Rs.4,59,241/- with interest and also imposed penalty under Rule 25 of the Central Excise Rules, 2002. On appeal, the Commissioner (Appeals) vide the impugned order dt. 29.04.2010 upheld the order of original authority. Hence this appeal.
2. Today, when the matter came up for hearing, on behalf of appellant, Ld. consultant Shri P.C. Anand submits that the issue is no longer res integra and has been decided in favour of the appellant in a number of cases for example, (i) Surya Roshni Ltd. Vs CCE Rohtak 2012 (285) ELT 518 (Tri.-Del.) and (ii) Ultratech Cements Ltd. Vs CCE & ST Tiruchirapalli 2016 (343) ELT 164 (Tri.-Chennai)
3. On the other hand, on behalf of Revenue, Ld.A.R Shri K.P. Muralidharan supports the impugned order.
4. Heard both sides and have gone through the facts. We find that the issue at hand is squarely covered by the case laws relied upon by the Ld. Consultant, which have unequivocally held that supplies made to SEZ / Developers by DTA unit are neither chargeable to Nil rate of duty nor exempt from payment of duty under exemption notification, hence they are not exempt goods for the purpose of Rule 2 (d) of Cenvat Credit Rules, 2004. The relevant portion of the Tribunals decision in Surya Roshni Ltd. (supra) is reproduced below :
"5.?We have considered that rival submissions. There is no dispute that common Cenvat Credit availed inputs have been used in the manufacture of goods supplied to DTA buyers on payment on duty and also in respect of the goods supplied to SEZ Developers without payment of duty. The point of dispute is as to whether the goods supplies to SEZ Developers without payment of duty are to be treated as exempted goods within the meaning of this term as defined in Rule 2(d) of the Cenvat Credit Rules, 2004 and whether in respect of these supplies, the provision of sub-rule (2) and (3) of Rule 6 ibid would be applicable.
6.?The term exempted goods as defined in Rule 2(d) in Cenvat Credit Rules means excisable goods which are exempted from the whole of the duty leviable thereon including the goods which are chargeable to nil rate of duty. There is no dispute about the fact that neither the goods, in question, are chargeable to nil rate of duty nor these goods when supplied to SEZ Developers are exempted from payment of duty by virtue of some exemption notification issued under 5A(I) of the Central Excise Act, 1944. Admittedly no duty is required to be paid on the goods supplied to SEZ Developers, as the same are treated as export in terms of the definition of this terms as given in Section 2(m) of SEZ Act, 2005. Though the learned departmental representative pleads that supplies to SEZ Developers are only deemed export and cannot be treated as export for the purpose of Central Excise Act, 1944 and the Rules made thereunder, the Section 51 of the SEZ Act provides that the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other Law for the time being in force or in any instrument having effect by virtue of any Law other than this Act. In view of the overriding provisions of 51 of SEZ Act, supplies to SEZ as well as to SEZ Developers by a D.T.A. unit would have been treated on exports for the purpose of Cenvat Credit Rules, 2004. Since the supplies to SEZ Developers are export, the same cannot be treated as exempted goods and hence the Provisions of sub-rule (1), (2) & (3) of the Rule 6 of the Cenvat Credit Rules, 2004 would not be applicable. Same view have been taken by the Tribunal in the case of Sujana Metal Products Ltd. v. CCE, Hyderabad (Supra), wherein the Tribunal held that during the period prior to 31-12-2008, supplies to SEZ Developers made without payment of duty are to be treated as exports and would be covered by sub-rule (6) of Rule 6 and accordingly the provision of sub-rule (1) (2) & (3) of Rule 6 would not be applicable."
5. We find that the above decision was followed by the Tribunal in Ultratech Cements Ltd. (supra) also. Following the ratio of these decisions, we hold that the appellants are very much entitled to the benefit of Notification No.67/95-CE in respect of intermediate goods used to manufacture final products which were supplied to a SEZ unit. In the event, impugned order cannot sustain and will require to be set aside in toto, which we hereby do. Appeal is therefore allowed with consequential relief, if any, any per law.
(operative part of the order pronounced in court)
(Madhu Mohan Damodhar) (Archana Wadhwa)
Member (Technical) Member (Judicial)
gs
6
Appeal No.E/477/2010