Karnataka High Court
Commissioner Of Central Excise vs Ecie Impact Pvt Ltd 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.2/2017
BETWEEN:
COMMISSIONER OF CENTRAL EXCISE
BANGALORE-III
C.R. BUILDING, QUEEN'S ROAD
BANGALORE-560001
KARNATAKA.
...APPELLANT
(By Mr. JEEVAN J. NEERALGI, ADV.)
AND:
ECIE IMPACT PVT. LTD.
P.O. BOX No.3, 8TH MILESTONE
TUMKUR ROAD, T. DASARAHALLI
BANGALORE-560057.
... RESPONDENT
THIS C.E.A IS FILED UNDER SECTION 35G OF THE
CENTRAL EXCISE ACT, PRAYING TO I. ANSWER THE
SUBSTANTIAL QUESTIONS OF LAW FRAMED ABOVE IN FAVOR
OF THE APPELLANT IN INTEREST OF JUSTICE AND EQUITY. II.
SET ASIDE THE IMPUGNED FINAL ORDER No.20445/2016
DATED 21-06-2016 PASSED BY THE CESTAT, SOUTH ZONAL
BENCH, BANGALORE IN THE INTEREST OF JUSTICE AND
EQUITY. III. PASS SUCH OTHER ORDER AS THIS HON'BLE
COURT DEEMS FIT IN THE CIRCUMSTANCES OF THE CASE IN
THE INTEREST OF JUSTICE AND EQUITY.
Date of Judgment 20-06-2018 C.E.A..No.2/2017
Commissioner of Central Excise Vs. ECIE Impact Pvt. Ltd.
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THIS C.E.A. COMING ON FOR ADMISSION, THIS DAY
Dr. VINEET KOTHARI J. DELIVERED THE FOLLOWING:-
JUDGMENT
Mr. Jeevan J. Neeralgi, Adv. for Appellant 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 has to be extended to the goods cleared to a "developer"
of a Special Economic Zone for their authorized operation.
Date of Judgment 20-06-2018 C.E.A..No.2/2017 Commissioner of Central Excise Vs. ECIE Impact Pvt. Ltd.
3/82. 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 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 Date of Judgment 20-06-2018 C.E.A..No.2/2017 Commissioner of Central Excise Vs. ECIE Impact Pvt. Ltd.
4/8the 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 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 Date of Judgment 20-06-2018 C.E.A..No.2/2017 Commissioner of Central Excise Vs. ECIE Impact Pvt. Ltd.
5/8operation" 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
SEZ notified under sub-section (1) of Section 4 of the Act, may be treated as in the nature of exports."
Date of Judgment 20-06-2018 C.E.A..No.2/2017 Commissioner of Central Excise Vs. ECIE Impact Pvt. Ltd.
6/814. 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 21.06.2016 vide Annexure-A, in view of the aforesaid judgment, granted relief to the Respondent-assessee with the following observations:
"3.2 It is pertinent to note the judgments of the Karnataka High Court in the case of Commr. Of C.Ex. & S.T., Bangalore vs. M/s. Fosroc Chemicals (India) Pvt. Ltd.
Date of Judgment 20-06-2018 C.E.A..No.2/2017 Commissioner of Central Excise Vs. ECIE Impact Pvt. Ltd.7/8
wherein the Hon'ble Karnataka High Court has held that the said amendment in Rule 6 has to be considered 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. Similarly in the case of Ultratech Cement Ltd. Vs. CCE, Nagpur [2015 (315) E.L.T. 238] wherein the Mumbai Bench of the Tribunal has allowed the benefit to the assessee by holding that the goods supplied from DTA to contractors of SEZ units/developers without payment of duty is treated as 'export' in view of Section 2(m) of Special Economic Zone Act 2005 and all the benefits which is given to export under any other law should be given to the SEZ Developer also. Similarly the Chennai Bench of the Tribunal in the case of S.P.Fabricators Pvt. Ltd. Vs. Commissioner of Customs, Chennai-II reported in 2015-TIOL-474 has held relying upon the Sujana Metal Products case cited supra that the goods supplied to SEZ Developers are to be treated as 'exports' Date of Judgment 20-06-2018 C.E.A..No.2/2017 Commissioner of Central Excise Vs. ECIE Impact Pvt. Ltd.8/8
under Section 2(m) of SEZ Act and that the amendment introduced in Rule 6(6) on 31.12.2008 is retrospective in nature."
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