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2016 (1) TMI 17 - CESTAT MUMBAI

2016 (1) TMI 17 - CESTAT MUMBAI - 2016 (332) E.L.T. 529 (Tri. - LB) - Maintainability of appeal before the tribunal - whether in terms of clause (b) of proviso to section 35B(1) of the Central Excise Act, appeals against orders relating to rebate on goods supplied to SEZ, will lie to the Appellate Tribunal - Held that:- In the case of Hindustan Petroleum Corpn. Ltd. vs. Commissioner of C.Ex, Mumbai [2013 (12) TMI 1133 - CESTAT MUMBAI] the Tribunal held that appeal against orders on refund in res .....

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duct Pvt. Ltd. [2013 (2) TMI 57 - GOVERNMENT OF INDIA] and in Indo Amines Ltd. [2013 (3) TMI 142 - GOVERNMENT OF INDIA] the Joint Secretary (RA) passed Orders-in-appeals against orders-in-appeal in matters relating to rebate on supplies from DTA to SEZ.

Reading proviso (b) to section 35B to mean that it includes cases relating to goods supplied from DTA to SEZ is only an inevitable corollary to holding that such supplies may be treated as export. While doing so the legal fiction is no .....

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c. Order Nos. M/5369-5376/2015-WZB/LB - Dated:- 17-12-2015 - M. V. Ravindran, Member (J) , P. S. Pruthi, Member (T) And Ramesh Nair, Member (J) For the Appellant : Shri J C Patel, & Shri D H Nadkarni, Advs For the Respondent : Shri Hitesh Shah, Commissioner (AR) ORDER Per P S Pruthi This Larger Bench has been constituted to decide whether in terms of clause (b) of proviso to section 35B(1) of the Central Excise Act, appeals against orders relating to rebate on goods supplied to SEZ, will lie .....

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t; 2. The background is that in some judgments the Tribunal entertained such appeals whereas in other cases the Tribunal viewed that it does not have jurisdiction. The Joint Secretary, Revision Application (RA) has also entertained appeals in identical cases. Therefore, the need has arisen for a decision in the matter by the Larger Bench. 3. We find that as per the language of the legal provision, that is proviso to section 35B(1) of the Act, the Appellate Tribunal shall not have jurisdiction to .....

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er various provisions, acquires status of deemed export. 4. Heard both sides. 5. The Ld. Counsel for the appellant states that Section 35 should be strictly construed to mean physical exports outside India. According to him, the said proviso clearly ousts the jurisdiction of the Joint Secretary (RA). He relies on the case of Ballarpur Industries Limited vs. Union of India 1987(27)ELT 41 (Bom.). Further, he relies on the Hon'ble Gujarat High Court decision in the case of Essar Steel Limited v .....

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ion from Customs duty on goods exported from a SEZ to any place outside India. Similarly, it provides exemption from duty of excise on goods brought from Domestic Tariff Area (DTA) to a SEZ. In short, Section 26 clearly recognizes the separate aspects of export to any place outside India and goods brought from Domestic Tariff Area to a SEZ. Thus, it recognizes the aspect of physical export to any place outside India but does not speak of the goods brought from DTA to SEZ as 'export'. Fur .....

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btained by modifying the procedure for normal export. 5.2 The last contention of the ld. Counsel is that the legal fiction which is sometimes contemplated expressly in the statute should only be considered so for the purpose for which it is created. He relied on the case law Mancheri Puthusseri Ahmed and Ors. in Civil Appeal no. 868 of 1989 Etc. (1996)6 SCC 185, and Commissioner of Income Tax, Kanpur vs. Mother India Refrigeration Industries P. Ltd. 6. The Ld. AR took us through the statutory pr .....

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utory provision for grant of rebate on exports. Therefore, if supplies made to a SEZ is not considered as export, then the question of sanction of rebate does not arise. In Board Circular no. 29/2006 dt. 27.12.2006 the important provisions of SEZ Act are listed. One of the provisions is section 2(m) which states that supplying goods from DTA to a SEZ has been defined to constitute export. Another provision, section 53 of the SEZ Act, states that a Special Economic Zone shall be deemed to be terr .....

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export. Ld. AR relied on the apex Court judgment in the case of Industrial Supplies Pvt. Ltd. Vs. Union of India (1980) 4 Supreme Court Cases 341 in which the Apex Court held that full effect must be given to the statutory fiction and it should be carried towards its logical conclusion. 7. We have given careful consideration to the submissions made by both sides. The issue involved is very clear and needs no repetition. We note the divergent judgments on the issue at hand. In the case of Hindus .....

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r vs. Shree PLA Pvt. Ltd. 2013(296)ELT 282 (Tri-Bang) Tribunal decided on appeal relating to 'exports' from DTA to SEZ. In Rohit Poly Product Pvt. Ltd. 2012 (284)ELT 137 (GOI) and in Indo Amines Ltd. 2012(284)ELT 147 the Joint Secretary (RA) passed Orders-in-appeals against orders-in-appeal in matters relating to rebate on supplies from DTA to SEZ. 7.1 The Ld. Counsel for the appellant referring to the legal provisions such as Section 26 of the SEZ Act and Rule 30 of the SEZ Rules emphas .....

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xports made out of India shall be followed. We have seen the judgments cited by him. 7.2 In the case of Essar Steel Ltd. (supra) the issue was whether export duty can be imposed under the Customs Act, 1962 by incorporating the definition of the term "export" under the SEZ Act into the Customs Act. The facts in this case were that export duty was sought to be levied under the Customs Act on goods supplied from DTA to the SEZ. The Hon'ble Court observed that a definition given under .....

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the other statute. The Court held this to be impermissible under the law. It was in this context that the court held that the legal fiction created under the SEZ Act 2005 by treating movement of goods from DTA to the SEZ as export, should be confined to the purposes for which it has been created. Although at first glance the judgment appears attractive to reply to the facts of the present case, on a deeper analysis, we find that the said judgment is made in a different context. 7.3 The whole pur .....

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ral Excise Act. In this context it could hardly have been the intention of Government to segregate rebate matters into two categories for appeal purposes - one category in respect of exports to a place outside India and another category in respect of so called deemed exports from DTA to SEZ. It appears that a suitable amendment to the proviso to section 35B was overlooked in 2005 to bring supplies to SEZ under its ambit. Nevertheless, the question arises whether the said legal provision can be i .....

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to section 35B will only result in an ancillary or natural consequence of reading the words "deemed export" into the word "export" in the proviso to section 35B. In this context, a very apt reference may be made to the Supreme Court judgment in the case of Industrial Supplies Pvt. Ltd. (supra) wherein the court held as follows: "It is now axiomatic that when a legal fiction is incorporated in a statute, the court has to ascertain for what purpose the fiction is created. .....

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the contractors for the working of the mine in question, were to be treated as such though, in fact, they were not so. The oft-quoted passage in the judgment of Lord Asquite in East End Dwelling Co. Ltd. vs. Finsbury Borough Council brings out the legal effect of a legal fiction in these Words: 2. LR 1952 AC 109, 132 If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequence and incidents which, if the .....

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te on goods supplied to a SEZ will not lie to the Tribunal. 7.4 We have also gone through the judgment in the case of Mancheri Puthusseri Ahmed and Ors. (supra). We may reproduce the relevant para as below: "In the first place the section creates a legal fiction. Therefore, the express words of the section have to be given their full meaning and play in order to find out whether the legal fiction contemplated by this express provision of the Statute has arisen or not in the facts of the cas .....

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ction by which it is created." In consonance with the above judgment we find that reading proviso (b) to section 35B to mean that it includes cases relating to goods supplied from DTA to SEZ is only an inevitable corollary to holding that such supplies may be treated as export. While doing so the legal fiction is not being extended beyond the purpose for which it was created. We hold so because there does not appear to be any intent to treat such deemed exports differently for the purpose o .....

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n case of supplies to SEZ from DTA units. Certainly such conclusion would result in a chaotic situation and render all Circulars and Rules under SEZ Act ineffective and without jurisdiction as far as grant of rebate on goods supplied to SEZ is concerned. The contra argument is that Section 51 of the SEZ Act would have overriding effect and the rebate can be sanctioned in terms of the provisions of Section 26 of the SEZ Act. We note that section 26 only provides for exemption of excise duties of .....

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