Clearances to SEZ Developers from DTA need not suffer 10% payment in terms of Rule 6(3)(b) of CCRs, 2004 – Commissioner
THE assessee cleared M.S Pipes and tubes without payment of central excise duly to SEZ Developers from 29.09.2006 to 31.12.2008 on the basis of procurement certificates issued to the SEZ Developers by the Assistant Development commissioner, Ministry of commerce.
The jurisdictional central excise authorities alleged that the assessee cleared goods without payment of duty to SEZ Developers and not to a unit in a Special Economic Zone as specifically mentioned under Rule 6(6)(i) of CENVAT Credit Rules, 2004 (before the amendment on 31.12.2008). It was alleged that they were not entitled for the exclusion under the Rule 6(6)(i) of the said Rules.
The goods cleared without payment of duty were thus construed as exempted goods. Since the assessee manufactured both dutiable as well as aforesaid exempted goods and failed to maintain separate accounts for receipt, consumption and inventory of inputs used in the manufacture of both dutiable and exempted goods, they were issued a show cause notice for recovering an amount equal to ten percent on such exempted goods in terms of Rule 6 (3) (b) of the said Rules . The demand worked out to Rs. 3.69 crores. Along with this, interest liable to be paid was also demanded and penalties were proposed to be imposed on the assessee.
After considering the submissions of the assessee and the provisions of Section 2(m) of SEZ Act, 2005 and Rule 30 of the SEZ Rules, 2006 read with Board Circular 29/2006 dated 27.12.2006, the Commissioner held that the goods supplied by the assessee without payment of duty to SEZ Developers falls under the purview of Rule (6)(6)(v) of CENVAT Credit Rules, 2004 and therefore the provisions of Rules 6(1), 6(2), 6(3) and 6(4) are not applicable in this case. The demand and penalty was set aside.
It is common knowledge that adjudicating authorities in the field formations always adopt a pro-revenue stand and religiously confirm demands against the assessees without going into the merits of the case. Contrary to this popular perception, here is a Commissioner who did not choose to follow the beaten track and issued an order upholding the correct position of law.