Document Fragment View
Fragment Information
Showing contexts for: SEZ act in Commissioner Of Central Excise, Thane I vs The Tiger Steel Engineering (I) Pvt Ltd on 8 July, 2010Matching Fragments
(m) export means
(i)
(ii) supplying goods, or providing services, from the Domestic Tariff Area to a Unit or Developer; or;
(iii) No doubt, the supply of goods by a DTA unit to SEZ unit is export for purposes of the SEZ Act. This legal position is evident from the provisions of Rule 30 of the SEZ Rules, which provides the procedure for procurements by a SEZ unit from the DTA. Sub-rule (1) of rule 30 provides that a DTA supplier supplying goods to a Unit or Developer shall clear the goods, as in the case of exports, either under bond (apparently in terms of Rule 19 of the Central Excise Rules, 2002) or as duty-paid goods under claim of rebate (apparently in terms of Rule 18 of the Central Excise Rules, 2002). This sub-rule also stipulates that such clearance of goods should be under the cover of ARE-1 referred to in notification No. 40/01-CE (NT) dated 26.6.01. Sub-rule (2) allows admission of such goods into SEZ unit on the basis of ARE-1 where exemption from payment of Central Excise duty has been availed by the DTA supplier without availment of export entitlements. Sub-rule (3) allows admission of such goods into a SEZ unit on the basis of ARE-1 and Bill of Export filed by the supplier or, on his behalf, by the SEZ unit itself where the procurements by the SEZ unit is under claim of export entitlements. This Bill of Export has to be assessed by the authorized officer before arrival of the goods in the normal course. The sub-rules (4) to (8) deal with various aspects such as assessment of Bill of Export, Grant of drawback or DEPB credit etc. Sub-rule (9) provides that a copy of the Bill of Export and ARE-1 with an endorsement of the authorized officer that the goods have been admitted in full in the SEZ shall be treated as proof of export. The remaining sub-rules deal with various aspects which are not of relevance to the issue at hand. The learned Counsel for the respondent has submitted that they followed the above procedure in respect of the goods supplied to SEZ units and, therefore, such goods should be deemed to have been exported for purposes of Rule 5 of the Central Excise Rules, 2004. Yet another provision referred to by the learned Counsel is Section 51 of the SEZ Act which gives overriding effect to the provisions of the Act vis-`-vis any other law for the time being in force. It has laid down 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. The learned Counsel has also referred to Section 53 of the SEZ Act, which provides that a Special Economic Zone shall be deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorized operations and that it shall also be deemed to be a port, airport, inland container depot, land station and land customs stations, as the case may be, under Section 7 of the Customs Act. On the strength of these provisions, the learned Counsel has argued that the clearances, in question, were made to a place which was deemed to be a territory outside the Customs territory of India and the same were covered by the definition of export given under Section 2 (m) (ii) of the said Act, and therefore, the respondent, as the exporter of the goods, should get the benefit of Rule 5 of the CENVAT Credit Rules, 2004. On the other hand, the learned Consultant has argued that the respondent cannot claim any benefit on the strength of the provisions of the SEZ Act or the Rules made thereunder in relation to any transaction covered by any of the provisions of the said Act/Rules. He has pressed into service the definition of export given under the Customs Act.
9. On a perusal of the provisions of the SEZ Act, we find that it is a special statute enacted by Parliament to benefit manufacturing units in Special Economic Zones. It is a special legislation which is intended to benefit such units only. The various provisions of the SEZ Act are to be considered as vehicles which convey such benefits to SEZ units. The definition of the term export given under Section 2 (m) of the SEZ Act and the various related provisions of the Act have to be considered in this perspective. Undisputedly, the definition export given under Section 2 (m) (ii) of the SEZ Act is a deeming provision inasmuch as it purports to designate as export a transaction which is not recognized as export under the Customs Act. Section 2 (18) of the Customs Act defines export thus:-
10. The learned Counsel has cited two judgments of the Honble Supreme Court in the context of urging that the deeming provisions of the SEZ Act should be given full effect to. We have perused the text of each of these judgments. In the case of Clariant International (supra), the Honble Supreme Court held thus: Purpose and object of creating a legal fiction is well known. Once a fiction is created upon imagining a certain state of affairs, the imagination cannot be permitted to be boggled when it comes to the inevitable corollaries thereof. In the case of Swarn Rekha Cokes and Coals (supra), Their Lordships held: thus It is well settled that in interpreting a provision creating a legal fiction, the court must ascertain the purpose for which the fiction is created and having done so, to assume all those facts and consequences which are incidental or inevitable corollaries to the giving effect to the fiction. In the instant case, by a legal fiction, procurements made by a SEZ unit from a DTA unit are exports by the SEZ unit. Again, by way of extension of this legal fiction, the SEZ Rules require the DTA unit to file a Bill of Export. The legal fiction cannot be extended beyond its statutory object. The object enshrined in the provisions of the SEZ Act and the Rules made thereunder, insofar as a procurement of goods effected by SEZ unit from the DTA is concerned, is that such procurement is an export for the SEZ unit so that the unit can claim all the export benefits available under the SEZ Scheme. In this context, useful reference may be made to Rule 23, which provides that supplies from the DTA to a Unit or Developer for their authorized operations shall be eligible for export benefits as admissible under the Foreign Trade Policy. The policy (vide Chapter-7 thereof) as amended with effect from 1.4.2006, laid down thus: The policy relating to Special Economic Zones is governed by SEZ Act 2005 and the Rules framed thereunder. But the SEZ Act or the SEZ Rules did not confer any export benefits on DTA suppliers. The export benefits referred to under Rule 23 ibid are benefits available to SEZ Unit/Developer inasmuch as supplies from the DTA to SEZ Unit/Developer are deemed to be exports made by the latter. We reject the contention of the learned Counsel that the respondent as DTA supplier was exporting goods to the SEZ unit. The filing of Bill of Exports by the DTA unit would not ipso facto make them exporter. Such filing of Bill of Exports by the DTA supplier is only a convenient procedure and the same cannot detract from the deeming provisions taking effect to the benefit of SEZ unit. Rules are subsidiary to Sections of the parent Act and cannot be the basis of interpretation of the latter. In none of the cases cited by the learned Counsel did the Supreme Court grant the benefit of any deeming provision to a party other than the party for whose benefit the provision was made. The deeming provisions under the SEZ Act and/or the SEZ Rules are, as we have noted, exclusively for the benefit of SEZ units. The DTA unit, by the mere activity of supplying goods to SEZ unit, cannot claim any complementary benefit on the strength of the deeming provisions of the SEZ Act/Rules. It is also pertinent to note that it was not the policy of the Government to grant benefits under the Central Excise Act or any Rules thereunder to DTA unit supplying goods to SEZ unit. Such benefits cannot be claimed by the DTA unit unless it is expressly provided for under the Central Excise Act or any Rules thereunder.
13. Both sides have referred to the Honble High Courts decision in Essar Steel (supra) in support of their respective arguments. The Honble High Court was dealing with the question whether the goods supplied by the DTA unit to SEZ unit were chargeable to export duty under the Customs Act. The Revenue, in that case, argued that, as such clearance of goods was covered by the definition of export given under the SEZ Act, export duty was leviable thereon. This contention was negatived by the High Court which held that, for the levy of export duty on any goods, the goods should be shown to have been physically exported out of the country as envisaged under the provisions of the Customs Act. Their Lordships did not permit the provisions of the SEZ Act to be applied to chargeability of export duty under the Customs Act. This approach of the Honble High Court is, in our view, working in favour of the Revenue in the present case, wherein, unlike in the case of Essar Steel, the Revenue has chosen to exclude the provisions of the SEZ Act/Rules from the purview of the Central Excise provision viz. Rule 5 of the CENVAT Credit Rules, 2004. Thus the view which was taken against the Revenue in Essar Steels case works in their favour in the instant case.