TMI Blog2013 (7) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... om one EOU to another without payment of duty considering it as deemed export – Moreover, Rule 18 and 19 would apply only when goods manufactured in a factory are exported and not when inputs on which credit is taken are exported – Decided in favor of Revenue. Penalty – Held that:- No intention on the part of the respondent to evade payment of duty is established – No penalty levied – Decided against the Revenue. - Appeal No. E/227/12& E/CO/16/2012 - Final Order No. 40250/2013 - Dated:- 3-7-2013 - Shri Mathew John, J. For the Appellant: Shri D.P. Naidu ADC (AR) and Shri Parmod Kumar, JC (AR) For the Respondent: Shri P.R. Renganath, Advocate JUDGEMENT Respondents are manufacturers of excisable goods namely, brake linings, clutch facings and disc braking pads. They take benefit of Cenvat credit on inputs used in the manufacture of these excisable products. 2. During Feb 2008 to Jan 2009, they removed certain inputs on which Cenvat credit was taken to another unit of theirs situated in Mahindra Special Economic Zone without reversing the credit taken at the time of receipt of the inputs in the factory. Revenue was of the view that the respondents had contrave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, Rule 6 (6) in respect of final products exported. These benefits cannot be extended to export of inputs on which credit is taken. 5.05. There is no provision in the CCR, 2004 for supply of inputs, on which credit has been taken, to units in SEZ without reversal of credit on deemed export basis. 5.06. He relied on the decision of the Tribunal in Lakshmi Autoloom Works Ltd Vs. CCE Trichy -2008 (213) ELT 428. In this case, the issue involved was whether an EOU can clear inputs obtained by it and for which credit has been taken, without payment of duty under provisions of Rule 1/95-CE to another EOU. The question was answered in the negative by the Tribunal. 5.07. Similarly in the case of CCE Vs. Tiger Steel Engineering (I) Pvt. Ltd-2010 (259) ELT 375 (Tri) it was held that benefit under Rule 5 of CCR cannot be extended to deemed export to SEZ. 5.08. Further, he relies on the decision of the Hon.Madras High Court in the case of BAPL Industries Ltd. Vs. UOI-2007 (211) ELT 23 (Mad) and relies on the following observation of the Court: 7. On a reading of the expression export and deemed export with the context with which they are employed in the Policy and with reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty of customs, under the Customs Act, 1962 or the Custom Tariff Act, 1975 or any other law for the time being in force, on goods imported into, or service provided in, a Special Economic Zone or a Unit, to carry on the authorised operations by the Developer or entrepreneur; (b) exemption from any duty of customs, under the Customs Act, 1962 or the Customs Tariff Act, 1975 or any other law for the time being in force, on goods exported from, or services provided, from a Special Economic Zone or from a Unit, to any place outside India: (c) exemption from any duty of excise, under the Central Excise Act, 1944 or the Central Excise Tariff Act, 1985 or any other law for the time being in force, on goods brought from Domestic Tariff Area to a Special Economic Zone or Unit, to carry on the authorised operations by the Developer or entrepreneur; (d) drawback or such other benefits as may be admissible from time to time on goods brought or services provided from the Domestic Tariff Area into a Special Economic Zone or Unit or services provided in a Special Economic Zone or Unit by the service providers located outside India to carry on the authorised operations by the Developer or en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 76F (1) provided for levy of export duty on supplies from DTA to SEZ and also provided or levy of import duty on removal from SEZ to DTA. Section 76F(1) was rescinded and on the SEZ Act, 2005, coming into force, the only levy provided was in Section 30, which required payment of an amount equal to import duty, on goods removed from the SEZ to the DTA. The provision for levy of export duty on removal from DTA to SEZ was not incorporated in the SEZ Act, 2005. This manifest intention of the legislature of not levying export duty on supplies made from DTA to SEZ is now sought to be frustrated by the respondents. It is also contended that the levy of export duty on supplies made to a SEZ Unit is clearly contrary to Rule 27 of the SEZ Rules, 2006, which entitles a SEZ Unit to procure goods from the DTA, without payment of duty, taxes or cess. It is further contended that the statement of objects and reasons which were presented before the Parliament, when the SEZ Act was introduced clearly states that the objective of creating a Special Economic Zone was to make available goods and services free of taxes and duties for promoting export-led growth. It is in consonance with this stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, for use in the manufacture or processing of goods which are exported, as may be approved by the Commissioner. His argument is that this rule allows removal of any goods from any premises and hence there is no reason to deny the benefit for removal of inputs on which Cenvat credit has been taken. 6.09. He further submits that the decision of the Tribunal in CCE Vs. Tiger Steel Engineering (I) Pvt Ltd sought to be relied upon by the department has been stayed by Bombay High Court as reported at 2011 (263) ELT A 104 (Bom). But, it is observed that this stay is granted after observing that refund involved was already granted. The Court only wanted to stay the recovery of refund granted. There is no view taken by the Court on the merits of the issue. 6.10. He also submits that the order of the larger bench of the Tribunal in the case of Lakshmi Automatic Loom Works Ltd Vs. CCE has been stayed by Madras High Court vide order dated 12-01-2009 in CMA No. 75/2009. In this case stay is granted after the Court had taken note of substantial payments against the demands confirmed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods on which Cenvat credit is taken, CCR has to be considered as a complete code in itself and since the said rules do not envisage export of inputs after taking credit, I am of the view that Rule 3 (5) has to be necessarily complied with. Such an approach only is consistent with the decision of the Larger Bench of Tribunal in Lakhmi Automatic Loom Works (Ltd).In the said decision it was held that inputs cannot be removed from one EOU to another without payment of duty considering it as deemed export. This decision was given with reference to Rule 57F of Central Excise Rule 1944though Rule 57 F(2) had provisions for export of inputs under bond. Present CCR do not even have such provisions. 9. Rule 6 (6) relied upon by the respondent deals with removal of excisable goods without payment of duty. Payment of duty arises in the case of final products and not inputs cleared as such. So this rule is not intended to deal with the issue at hand. So is the decision in the case of Sujana Metal products Ltd Vs. CCE 2011 (273) ELT 112 (Tri-Del) relied upon by respondent. 10. Rule 19 (2) of the Central Excise rules 2002 relied upon by the respondent is applicable only subject to approv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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