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2015 (10) TMI 1058 - CESTAT CHENNAI

2015 (10) TMI 1058 - CESTAT CHENNAI - 2016 (343) E.L.T. 164 (Tri. - Chennai) - Denial of exemption claim - Captive consumption - Notification No.67/95-CE, dated 16.03.1995 - SEZ clearances - whether the goods supplies to SEZ Developers without payment of duty are to be treated as exempted goods within the meaning of this term as defined in Rule 2(d) of the Cenvat Credit Rules, 2004 and whether in respect of these supplies, the provision of sub-rule (2) and (3) of Rule 6 ibid would be applicable .....

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cussed above clearly answers the above question. When the words exempted goods used in the said notification, it only means ‘final products exempted under the Central Excise Act read with Central Excise Rules or any notification issued there under'. - Appellants had duly followed the procedures set out in the above Rules, and executed bond before the excise authorities and cleared the goods without payment of duty. If the goods are fully exempted, the question of following the procedure unde .....

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held the benefit of Notification No.67/95-CE is eligible for the goods captively consumed for manufacture of final products cleared against the international competitive bidding under Notification No.6/2006. - Ratio of Tribunal decision squarely applicable to the present case, the appellants are eligible for the benefit of the exemption under Notification No.67/95. - As final resort demanding duty on the intermediate product is otherwise also hit by Revenue neutrality, as the appellant .....

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dered that the supplies to SEZ are exports. Therefore, the demand of duty on the intermediate product clinker used in manufacture of cement supplied to SEZ units/developers is clearly revenue neutral as the appellants could have claimed refund or availed Cenvat credit. In this regard, as rightly held by the Tribunal in the case of Reliance (2007 (12) TMI 69 - CESTAT, AHMEDABAD) demand of duty on intermediate products will only increase scriptory work with no benefit to the revenue. - appellants .....

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mber (T) And Pradeep Kumar Choudhary, Member (J) E/Misc/41256/ 2013 and E/00319/2009 E/Misc/41280/ 2013and E/00360/2009 E/00588/2009 E/EH/40931/2014 and E/00119/2010 E/00153/2010 E/00155/2010 E/00399/2010 E/00479/2010 E/00505/2010 E/00508/2010 E/00551/2010 E/00226/2011 E/00316/2011 E/00392/2011 E/00449/2011 E/00350/2012 E/00482/2012 E/40269/2013 E/40960/2013 E/42206/2013 E/42284/2013 E/42288/2013 For the Appellants : Mr Raghavan Ramabhadran, Adv., at S.Nos. 1, 2, 09, 16, 18 & 22, Mr R Partha .....

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ch of appeals are taken up together as the issues are common and relates to denial of exemption on clinkers manufactured and captively consumed in the manufacture of cement. 2. The assessees are manufacturers of cement falling under Chapter Heading 2523 29 10 and 2523 29 39. In the course of manufacture of cement the assessees also manufacture Clinker falling under Heading 2523 10 00 which is further used in the same factory captively in the manufacture of cement. The appellants cleared cement t .....

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assed the adjudication orders and appellant preferred the appeals. In the remaining cases, the lower authority has confirmed the demand and on appeal Commissioner (Appeals) upheld the orders and dismissed the appeals except in the case of Revenues appeals at S.No.10,12 & 13, where the Commissioner (Appeals) has allowed assessees appeals and set aside the impugned orders. 3. Heard both sides. The counsel Shri. Raghavan Ramabadran appeared for the appellants at S.Nos.1, 2, 16, 18 & 22 Five .....

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.2003 up to 20.02.2007. Consequent to the coming in to vogue of SEZ Act with effect from 10.02.2006, the final goods, cement, was cleared to SEZ units by treating as supplies to SEZ as an export without payment of duty. He discussed the Notification No.67/95-CE. As per the main clause of the exemption, the goods specified under table annexed to the notification were exempted when used for manufacture of final products prescribed in the table. The table annexed to the notification covers all chap .....

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er to attract the proviso the exemption from payment of duty must be qua goods and not qua dealer/person/transaction. They have cleared the cement without payment of duty to SEZ as per the SEZ Act. Cement is not exempted from payment of duty under Section 5A of the Central Excise Act. Therefore, they are not hit by the proviso to the Notification 67/95-CE. He referred to the Supreme Court judgment in the case of Commissioner of Sales Tax, Jammu & Kashmir & Ors. Vs Pine Chemicals Ltd. &am .....

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They have followed all the procedures set out for exports like filing ARE-1 return and clearing the goods for export under bond. He further submits that clearance to SEZ is treated as exports and the duty is not required to be paid on the cement cleared to SEZ as it is treated on par with physical exports. He referred to Section 2 (m) and Section 51 of the SEZ Act and mentioned that any supplies by DTA units to SEZ are treated as exports and they are entitled for the benefits like clearance with .....

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SEZs. He also referred to the Notes on clauses to Finance Bill, 2007 wherein in clause 106 it is mentioned that the word FTZ has been deleted from the Central Excise Act as it has become redundant and substituted with the word SEZ. 5. He submits that even if it is not covered under sub-clause (i) of the proviso, it is also covered under sub-clause (vi) as they have discharged their obligations under Rule 6 of the Cenvat Credit Rules. He submits that Rule 6 casts various obligations on a manufac .....

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dit Rules, 2001 also refers to supply of goods to SEZ as one of the methods of discharging obligations under Rule 6 and hence both Rule 6(6) of Cenvat Credit Rules, 2004 and Rule 6 of Cenvat Credit Rules, 2001 are identical in this respect. He emphasised that the obligation under Rule 6 stands fulfilled once the goods are supplied to SEZ. He also referred to Rule 6 (6) (v) which relates to export under-bond which also stands satisfied. Therefore, the appellants have complied with the requisite p .....

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shall be read as a reference to the provisions of Cenvat Credit Rules, 2004. He further submits that irrespective of whether the reference to Cenvat Credit Rules, 2001 in Notification 67/95-CE is treated as legislation by way of incorporation or legislation by way of reference the result will be the same as they have fulfilled the obligations under both 2001 Rules and 2004 Rules. He also refers to this Tribunals decision in the case of Rajshree Sugars and Chemicals Ltd. &Ors. Vs Commissione .....

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6 (Tri.-Bang.). Once the duty is levied on the intermediate product i.e., clinker, the very purpose of making export duty-free to the supplies to SEZ is defeated. He also submits that even if the duty is paid on the intermediate product, the issue is revenue neutral as they are eligible for the Cenvat credit of such duty paid on the clinker. Even in case duty is paid on the cement, they are eligible for the rebate. Thus demand of duty on clinker only increases the scriptory work. He relied on th .....

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E.L.T. 518 (Tri.-Del.) (ii) Thermo Cables Ltd. Vs Commissioner of Customs & Central Excise, Hyderabad reported in 2013 (292) E.L.T. 412 (Tri.-Bom.). 7. Regarding the demand pertaining to the period prior to the enactment of SEZ Act, final product cement, was exempted under Notification No.58/2003. During this period they have cleared cement to SEZ unit under this notification. He submits that besides all the above submissions, the demand is also hit by limitation. Even if they cleared under .....

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ritten submissions and reiterated the same. He submits that the demand pertains to both the period prior to the enactment and after the enactment of the SEZ Act. He submits that they are eligible for the benefit under Notification 67/95-CE. For the period prior to enactment even though goods were cleared under Exemption Notification No.58/2003, the goods were supplied to SEZ and no demand on intermediate goods used in the manufacture of final products cleared to SEZ can be made. He relied on the .....

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without payment of duty under-bond. He also drew our attention to the fact that the Board has clarified that Rule 19 of Central Excise Rules, 2002 and Rule 13 are similar provisions. He relied on the following decision:- Hindustan Petroleum Corporation Ltd. Vs Collector of Central Excise reported in 1995 (77) E.L.T. 256 (S.C.) 9. As regards the Revenue appeal, he submitted that the lower appellate authority has rightly allowed the exemption. 10. Learned Shri R. Parthasarathy, Consultant appeared .....

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ndia Vs Steel Authority of India Ltd. reported in 2013 (297) E.L.T.166 (Chattisgarh) (ii) CCE & ST Vs Fosroc Chemicals India Pvt. Ltd -2014-TIOL-1609-HC-CH 11. The learned Advocates S/Shri S. Muthuvenkataraman and S. Gokarnesan appeared for the appellants at S.Nos.17 & 23 respectively for M/s. Dalmia Cements Bharat Ltd. Shri S. Gokarnesan submitted written submissions and reiterated the same. He also concurred with the views of other counsels.He further submitted that there should not be .....

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the raw material without payment of duty. In the present case, had the clinker been procured from outside, no duty would have been payable under Rule 19(2), and therefore demand of duty on clinker manufactured within the factory and used captively will lead to discrimination between the assessees who is opting to follow either Rule 18 or Rule 19 of the Central Excise Rules. He relied on the following decision:- Maneesh Pharmaceuticals P. Ltd. Vs Commissioner of Central Excise, Mumbai reported i .....

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s at S.Nos.5 & 17 for M/s. The India Cements Ltd. and M/s. Dalmia Cement Bharat Ltd. respectively and reiterated the written submissions. He concurred with the arguments put forth by other counsels. 14. On the other hand, Shri Rammohan Rao, Joint Commissioner the learned Authorised Representative submitted the written synopsis. The Authorised Representative for the Revenue countered the appellants' arguments. He submits that the background of the present Notification No.67/95 is based on .....

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round, he submits that SEZ is not mentioned as category of exception under the proviso to the notification. He elaborately discussed the provisions of SEZ Act. He drew attention to the Section 26 (1)(c) and Section 51 of SEZ Act and submitted as per the wording to said sections duty of excise on goods brought from DTA units to SEZ is clearly exempted. Therefore, it may not be said that the goods are cleared without payment of duty but it is clearly exempted under SEZ Act. He further submits that .....

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s exports and not exempted, he reiterates that the goods supplied to SEZ are exempted under Section 26(1)(c) of SEZ Act. Relied on the following decision of the Hon'ble High Court of Karnataka and Gujarat, it is submitted by the learned AR that by a fiction such supplies are treated as Exports for the purpose of allowing export benefits:- (i) Shyamaraju & Co. (India) Pvt. Ltd. Vs Union of India reported in 2010 (256) E.L.T.193 (Kar.) (ii) Essar Steel Ltd. Vs Union of India reported in 20 .....

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ngs of the impugned Notification. Learned Authorised Representative refers to Boards Circular dated 19.03.22010 (sic) to state that procedure under Rule 18 and 19 of Central Excise Rules is adopted for supplies to SEZ in order to give effect to Section 26 of the SEZ Act. He drew attention to amendment to explanation to Rule 18 of Central Excise Rules in 2015 Budget. 16. As regards claim of the Appellants regarding clause (vi) under the proviso to the impugned Notification, it is stated by the AR .....

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2004 and Rule 6 of Rules 2004 is not mentioned under said clause (vi).Further, appellants cannot say that they complied with Rule 6 of Cenvat Credit Rules, 2001. 17. Regarding the appellants claim that exemption relating to clearance to FTZ also covers clearances to SEZ he submits that SEZ is different from FTZ. SEZ comes into existence by a different enactment. The wording of notification is clear and unambiguous. He relied on the paragraphs 3 and 18 of the following decision:- M/s. Shri Ganes .....

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pan India Ltd. reported in- 2002-TIOL-89 SC -CX-LB. He further submits that appellants relying on the decision of the Tribunal in the case of Surya Roshini Ltd. (supra) is not applicable as Section 26 (1)(c) of SEZ Act was not considered in that case. He further submits that citation M/s. Pine Chemicals Ltd. (supra) relied by the appellants is not applicable on facts and also that the wordings of the impugned Notification are clear. In view of the wording to the provisio to the notification, it .....

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a Vs Modern Co-operative Group Housing Society Ltd. reported in 2010 (262) E.L.T 6 (S.C.). (ii) Associated Cement Co. Ltd. Vs Commissioner of Central Excise, Chandigarh - 2006 (206) E.L.T.329 (Tri.-Del.). (iii) Punjab Tractors Ltd. Vs Commissioner of Central Excise, Chandigarh reported in 2005 (181) E.L.T.380 (S.C.) (iv) Jaya Yuhshin Ltd. Vs Commissioner of Central Excise, New Delhi reported in 2000 (119) E.L.T.718 (Tribunal LB) and submits finally that Notification NO.67/95-CE is not applicable .....

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entral Excise Act and it would not be extended to exemptions under another Act i.e., SEZ Act. He again reiterated that the word exempted goods applies only to exemption qua goods and not applicable to exemption qua person or transaction. He further submits that Section 26 of the SEZ Act cannot be read to deny exemption or to introduce a levy as the SEZ Act is only for granting benefit for promotion of exports. He submits that as per the objectives of SEZ Act, the preamble and Statement of Object .....

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Section 26 exempting goods under SEZ Act cannot be imported to deny the exemption under Notification No.67/95-CE. He said that the Authorised Representative relying on the circular dated 19.3.2010 is only in favour of the appellants and in no way against them. He also submits that as per the General Clauses Act, Cenvat Credit Rules, 2001 mentioned in the Notification No.67/95 should be read a Cenvat Credit Rules, 2004. He also submits that in any case Cenvat Credit Rules, 2001 is not against the .....

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available should to SEZs as well. To counter the case law relied on by the department, he submits that In Shri Ganesh Jute Mills case, Indian Stores Department was not substituted by Department of Supplies. Department of Supplies was formed by combining some of the functions of these departments and some new functions was created unlike SEZs and therefore reliance on this decision will not help the case of the Revenue. Regarding the departments submission on the Revenue neutrality in the Jay Yu .....

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d excise duty has been demanded. In the case of three appeals filed by the Revenue, the original Adjudicating authority had denied the Exemption Notification and confirmed the duty on clinker whereas the Commissioner (Appeals) has set aside the demand and allowed the benefit of Exemption Notification No.67/95 and the Revenue has come in appeal. On perusal of the impugned orders of assessees appeals, we find that the Adjudicating authority denied the benefit of Notification No.67/95-CE on three c .....

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used in the manufacture of cement cleared to SEZ without payment of duty are eligible for benefit under Notification No.67/95-CE or not? 2. Whether cement supplied to SEZ are exempted goods or not? 3. Whether sub-clause (vi) in the proviso to the notification referring to Cenvat Credit Rules, 2001 is to be read as applicable to Cenvat Credit Rules, 2001 or Cenvat Credit Rules, 2004? 4. Whether the term FTZ used in the proviso to the Notification 67/95-CE will include SEZ also? 23. Before detail .....

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ortance) Act, 1957 (58 of 1957), (hereinafter referred to as the said Special Importance Act),] the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts - (i) capital goods as defined in the [CENVAT credit Rules, 2002] manufactured in a factory and used within the factory of production; (ii) goods specified in [column (1)] of the Table hereto annexed (hereinafter referred to as inputs) manufactured in a factory and used within the factory of pr .....

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dertaking, or (iii) To a unit in an Electronic Hardware Technology Part, or (iv) To a unit in a Software Technology Park, or (v) Under notification No.108/95-Central Excise, dated the 28th August, 1995, or (vi) By a manufacturer of dutiable and exempted final products, after discharging the obligation prescribed in rule of the CENVAT Credit Rules, 2001. TABLE S.No. Description of inputs Description of final products (1) (2) (3) All goods falling under the First Schedule to the Central Excise Tar .....

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ion to manufacture of final products specified in Col.2 of the table. Clinker classifiable under 2502 10 is covered under Column 1 of the Table as input and cement classifiable under Chapter Heading 2502 09 is covered under Column 2 of the Table as final product. Therefore, there is no dispute that both inputs and final products are specified in the table of the notification and the appellants manufactured clinker and captively consumed for manufacture of cement and cleared the cement on payment .....

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y but cleared without payment of duty by following the requisite procedures set out in SEZ Act and SEZ Rules read with Central Excise Rules. The Revenue contended that goods supplied to SEZ are exempted and demanded duty on the clinkers used in the manufacture of cement which are cleared to SEZ units/developers. We find this very issue has been clearly discussed by the Tribunal Principal Bench in the case of Surya Roshni (supra). Relevant paragraphs are reproduced as under: 5. We have considered .....

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ct of these supplies, the provision of sub-rule (2) and (3) of Rule 6 ibid would be applicable. 6. The term exempted goods as defined in Rule 2(d) in Cenvat Credit Rules means excisable goods which are exempted from the whole of the duty leviable thereon including the goods which are chargeable to nil rate of duty. There is no dispute about the fact that neither the goods, in question, are chargeable to nil rate of duty nor these goods when supplied to SEZ Developers are exempted from payment of .....

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ade thereunder, the Section 51 of the SEZ Act provides 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. In view of the overriding provisions of 51 of SEZ Act, supplies to SEZ as well as to SEZ Developers by a D.T.A. unit would have been treated on exports for the purpose of Cenvat Credit Rules, 2004. Since the supplie .....

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ule (6) of Rule 6 and accordingly the provision of sub-rule (1) (2) & (3) of Rule 6 would not be applicable. 24. From the above decision, we find that the issue relates to availment of Cenvat credit, where the appellants have supplied both dutiable and exempted goods. While allowing the appeal, the Tribunal has categorically discussed the meaning of exempted goods defined in Rule 2(d) of Cenvat Credit Rules and held that the goods supplied to the SEZ units/developers are neither chargeable t .....

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y both Revenue and the appellants, there is no definition of exempted goods' in Central Excise Act except Rule 2 (d) of Cenvat Credit Rules. The Tribunals decision in the case of Surya Roshni (supra) discussed above clearly answers the above question. When the words exempted goods used in the said notification, it only means final products exempted under the Central Excise Act read with Central Excise Rules or any notification issued there under'. 25. Revenue contended that Section 26(1) .....

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cise Act or Customs Act or under the Finance Act. In the present case, the final product Cement is an excisable commodity falling under Chapter 25 of CETA which are dutiable. There is no exemption of excise duty on cement. Therefore, in view of the Tribunals Principal Bench decision of Surya Roshini case already discussed above, we are of the considered view that the final product cement cleared to SEZ units/developers is not exempted goods under any notification issued under Rule 5A of the Cent .....

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Excise Rules, 2002 is reproduced as under: RULE 19.Export without payment of duty. (1) Any excisable goods may be exported without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, as may be approved by the [Principal Commissioner or Commissioner, as the case may be. Any material may be removed(2) without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, for use in the manufacture or .....

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e fully exempted, the question of following the procedure under ARE-1 and execution of bond does not arise. Accordingly, we hold that the cement cleared to SEZ unit/developers are not exempted goods but cleared without payment of duty by following the procedures and conditions stipulated in both SEZ and Rule 19 of CER Rules and the clinkers used captively for manufacture of cement cleared to SEZ is covered under Notification 67/95 from exemption of excise duty. 27.Having discussed the main issue .....

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8/2015.Cx.8, dated 28.04.2015 with regard to granting of rebate of duty on goods cleared from DTA to SEZ. This circular, summarizes the contents of all previous Boards circulars and considered various provisions of SEZ Act and SEZ Rules and categorically clarified that supply of goods from DTA to SEZ units/ developers constitutes exports. The said circular is reproduced herein as under: CIRCULAR NO 1001/8/2015-CX, Dated: April 28, 2015 Sub: Clarification on rebate of duty on goods cleared from D .....

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CENVAT credit when goods are cleared from DTA to SEZ. 2. It is seen that: i. Section 2 (m) (ii) of the SEZ Act, 2005 defines export to, inter-alia, mean "supplying goods, or providing services, from the Domestic Tariff Area to a Unit or Developer". ii. Section 26 (1) (d) of SEZ Act, 2005 mentions that subject to the provisions of the sub-section (2), every Developer and entrepreneur shall be entitled to drawback or such other benefits as may be admissible from time to time on goods br .....

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fect by virtue of any law other than this Act". iv. Section 53 (1) of the SEZ Act mentions that "A Special Economic Zone shall, on and from the appointed day, be deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorized operations". v. Rule 30 (1) of the SEZ Rules, 2006 reads as under- "The Domestic Tariff Area supplier supplying goods to a Unit or Developer shall clear the goods, as in the case of exports, either under bon .....

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her law in case of any inconsistency. Section 53 of the SEZ Act makes an SEZ a territory outside the customs territory of India. It is in line of these provisions that rule 30 (1) of the SEZ rules, 2006 provides that the DTA supplier supplying goods to the SEZ shall clear the goods either under bond or as duty paid goods under claim of rebate on the cover of ARE-1. 4. It was in view of these provisions that the DGEP vide circulars No. 29/2006-customs dated 27/12/2006 and No. 6/2010 dated 19/03/2 .....

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s deemed to be outside the Customs territory of India, any licit clearances of goods to an SEZ from the DTA will continue to be export and therefore be entitled to the benefit of rebate under rule 18 of CER, 2002 and of refund of accumulated CENVAT credit under rule 5 of CCR, 2004, as the case may be. 28. In view of the specific clarification at para (3) & (4) of the above circular dated 28.04.2015, the Revenue cannot plead that the supplies to SEZ unit is not an export. In view of the above .....

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of duty runs absolutely counter to the legal fiction created under the SEZ Act. The very purpose of SEZ Act is to extend the benefit in order to promote exports. This is clearly set out in the Statement of Object and Reasons laid down in the SEZ Act itself. The objectives of SEZ set out in the Finance Bill is reproduced herein as under:- 1. The Government of India had announced a Special Economic Zone Scheme in April 2000 with a view to provide an internationally competitive environment for exp .....

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ed to the Special Economic Zone developer and units are implemented through various notifications and circulars issued by the concerned Ministries/Departments. The present system, therefore, does not lend enough confidence for investors to commit substantial funds for development of infrastructure and for setting up of the units in the Zones for export of goods and services. In order to give a long term and stable policy framework with minimum regulatory regime and to provide expeditious and sin .....

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rvices supplied to SEZ units. 29. Therefore, in view of the recent Boards circular, dated 28.04.2015 and as per objectives of the SEZ Act, we hold that the goods supplied to SEZ unit/developer constitute as export and no duty can be levied on the clinker used in the manufacture of cement as the finished goods are supplied to SEZ units/developers without payment of duty by following procedures of Rule 19 of Central Excise Rules and Rule 30 of SEZ Rules. 30. In this regard, we find the Tribunal in .....

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ph of this Notification exempts from payment of CE duty any inputs manufactured in a factory and used within the same factory in or in relation to the manufacture of final products. Input must be one of those specified in the first column and the final product must be one of those specified in the second column of the table annexed to the Notification. Admittedly, copper wire is one of the inputs and the power cables manufactured and cleared by the assessee are final products covered by the Noti .....

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the duty of excise or additional duty of excise leviable thereon or are chargeable to nil rate of duty, other than those goods which are cleared, (i) to a unit in a Free Trade Zone, or (ii) to a hundred per cent Export Oriented Undertaking, or (iii) to a unit in an Electronic Hardware Technology Park, or (iv) to a unit in a Software Technology Park, or (v) under notification No. 108/95-Central Excise, dated the 28th August, 1995, or (vi) by a manufacturer of dutiable and exempted final products .....

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s in question in the manufacture of the exempted final products, he is entitled to the benefit of exemption from payment of duty on such inputs in terms of the opening paragraph of the Notification. This right is not hit by the opening portion of the proviso to the Notification as the manufacturer is squarely covered by the exception carved out of the proviso vide clause (vi) under the proviso. The Department, it appears, would like to drive the assessee out of the purview of this exception on t .....

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Rule 6 of the CENVAT Credit Rules, 2004 and clause (vi) under the proviso to Notification No. 67/95-C.E. ibid would show that the assessees claim for exemption from payment of duty on copper wire under the Notification was not hit by the opening portion of the proviso to the Notification. The issue discussed by the Tribunal in the above order is similar to the facts of the present case, the only difference is while the goods were supplied under international competitive bidding under clause (vi .....

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y academic. We find that Cenvat Credit Rules, 2001 has been amended by Cenvat Credit Rules, 2002 and further amended by Cenvat Credit Rules, 2004. Merely for the reason that the Notification No.67/95referring to Cenvat Credit Rules, 2001 and not Cenvat Credit Rules, 2004 cannot be a valid reason to deny the exemption under clause (vi) of the proviso to the notification. Applying Section 8 of the General Clauses Act, any reference to 2001 Rule in Notification 67/95-CE should automatically be read .....

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obligations under Rule 6 of the 2001 Rules would also stand discharged. 32. As regards the last issue, the Revenue contended that the clause (i) of proviso to Notification No. 67/95 provides exception only for clearance to FTZ and not for SEZ. It is contended that the very purpose of the non-inclusion of SEZ in Notification No.67/95 is to make it apply only to FTZ and not to SEZ. We are unable to accept departments the view for the reasons that during the relevant period under dispute there wer .....

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come redundant and hence it seeks to amend sub-section (1) of Section 3 of the Central Excise Act. The Relevant clause is reproduced as under:- Clause 106 seeks to amend sub-section (1) of section 3 of the Central Excise Act, 1944 with a view to omit the provisions relating to free trade zone which have become redundant due to enactment of the Special Economic Zones Act, 2005. It is also proposed to amend clause (iii) of Explanation 2 of said sub-section so as to substitute the meaning of Specia .....

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iso to Notification No.67/95 should also been amended accordingly to replace the word FTZ to SEZ. Therefore, we are unable to accept the dept. plea that clause (i) of proviso to the notification No.67/95 is intentionally kept and meant only to FTZ and not SEZ and we hold that the appellants are eligible for the exemption under Notification No.67/95. 34. Having discussed all the points on merits, we also find that as final resort demanding duty on the intermediate product is otherwise also hit by .....

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the intermediate product having considered that the supplies to SEZ are exports. Therefore, the demand of duty on the intermediate product clinker used in manufacture of cement supplied to SEZ units/developers is clearly revenue neutral as the appellants could have claimed refund or availed Cenvat credit. In this regard, as rightly held by the Tribunal in the case of Reliance (supra) demand of duty on intermediate products will only increase scriptory work with no benefit to the revenue. Relevan .....

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