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2021 (10) TMI 185 - Central Excise
CENVAT Credit - inputs/input services which is used in the manufacture of exempted goods of provision of exempted services - clearance of goods to SEZ developers by claiming exemption from payment of Central Excise duty - availing Cenvat credit on the inputs used in the manufacture of such goods - exemption to supplies made to SEZ developers - effect of notification dated 31.12.2008 - demand of interest and penalty - HELD THAT:- In this case, the appellant has not supplied the goods to SEZ units but has supplied them to SEZ developers. The case of the Revenue is, therefore, that the appellant is not entitled to the exemption from provisions of Rule 6(1), (2), (3) and(4) available under Rule 6(6)(i) of CCR. Since the appellant had not maintained separate accounts of inputs and input services, it is required to pay an amount equal to 10% of the value of the goods supplied to the SEZ developers. The show cause notice was issued in 2009 covering the period 28.12.2006 to 31.12.2008. In 2008, Rule 6(6)(i) was amended vide Notification No. 50/2008-CE(NT) dated 31.12.2008 to read as "cleared to unit in a Special Economic Zone or to developer of a Special Economic Zone for their authorised operations".
Whether the notification dated 31.12.2008 giving exemption to supplies made to SEZ developers from Rule 6(1),(2),(3)&(4) will have retrospective application? - HELD THAT:- The inclusion of SEZ developers under Rule 6(6)(i) is clarificatory and applies to the period prior to 30.12.2008 also. This judgment was subsequently followed by the High Court again in the case of COMMISSIONER OF CENTRAL EXCISE BANGALORE-III, VERSUS M/S. LOTUS POWER GEARS (P) LTD. [2016 (6) TMI 998 - KARNATAKA HIGH COURT] - the appellant was not required to follow Rule 6(1), (2), (3) and (4) in respect of the supplies it made to the SEZ developers and hence it was not required to maintain separate accounts or pay an amount equal to 10% of the value of such supplies.
Demand of interest and penalty - HELD THAT:- As the demand in the impugned order cannot be sustained, neither can the demand of interest or the imposition of penalty be sustained.
Appeal allowed - decided in favor of appellant.