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2021 (2) TMI 655 - HC - Central ExciseSEZ unit - Eligibility of HSD/fuel for exemption from Central Excise Duty - Rule 27 of Central Excise Rules - HELD THAT:- In the present case, Fuel/HSD is used to run the capital equipment deployed directly in the manufacturing process. No exemption is sought for fuel used in running of vehicles/other equipment not connected with the eligible activity. The capital equipment deployed have a direct nexus with the manufacturing process as, in their absence, the equipment cannot be run and there would, consequently, be no manufacture/eligible activity. HSD/fuel is thus consumed in the running of the capital equipment which is intrinsic to the process of manufacture itself. The respondent has itself accepted this position as exemption is granted with demur to fuel/HSD used in running vehicles owned by the petitioner and denied only to leased equipment. The argument of the revenue also ignores the fact that the exemption under Rule 27(1) is extended to ‘all types of goods’ and the width of language employed would include diesel/HSD so long as the goods are used towards/in authorised operations and excepting where the goods are prohibited. Thus, there is no justification in law to deny exemption to HSD/diesel, used as it is, in the running of the capital equipment deployed in the manufacturing process. The preamble to the Act states that the SEZ Act provides for the establishment, development and management of the Special Economic Zones for the promotion of exports and for matters connected therewith or incidental thereto - The Supreme Court in the case of BAJAJ TEMPO LIMITED VERSUS COMMISSIONER OF INCOME-TAX [1992 (4) TMI 4 - SUPREME COURT] considered the interpretation to be accorded to a provision granting exemption, concluding that where the exemption was intended for the encouragement of specified sectors, activities or areas, the interpretation of such provisions should be liberal and not narrow. The respondent has raised the plea of alternate remedy and states that the petitioner ought to have exhausted the remedy of approaching the Unit Approval Committee and Board of Approval for addressing its grievances rather than rushing to this Court by way of present writ petition. The petitioner has raised a question of interpretation of the SEZ Act and Rules and, there are, admittedly, no disputes on facts. Petition allowed.
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