TMI Blog2019 (3) TMI 1698X X X X Extracts X X X X X X X X Extracts X X X X ..... were removed from the factory of the appellant to a unit in the SEZ under the cover of ARE-1 Form and therefore the appellant is entitled to the exemption permitting retention of the credit availed on the duty paid on inputs. In terms of Rule 6(6) of CENVAT Credit Rules it is contended that, the liability for reversal of the credit, envisaged under Rule 3(5) of the CENVAT Credit Rules, will not apply in this case because the inputs have been cleared to a unit in the SEZ through the bond executed. Therefore the demand for reversal cannot be sustained, is the contention. In this regard, Circulars issued by the Central Board of Excise Customs assumes importance. In Circular No. 29/2006-Cus., dated 27-12-2006, which pertains to implementation of the SEZ Act, 2005, it is provided that, in the light of provisions contained under Sections 2(m) and 51 of the Act, the supplies from DTA to a unit in the SEZ for authorized operations inside the SEZ, may be treated as in the nature of exports - It is mentioned that the provisions under Rule 30(1) of the SEZ Rules was framed in line with those provisions and it provides that a DTA supplier supplying goods to the SEZ shall clear the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 141 - 15-16. The Commissioner (Appeals) had confirmed the demand issued by the lower authority by holding that the same is perfectly in order. Aggrieved by the order of the Commissioner (Appeals) the appellant had approached the Appellate Tribunal. Through the order impugned herein, the Appellate Tribunal had dismissed the appeals and confirmed the orders of the lower authorities. It is under such circumstances the above appeals are filed. 3. On the basis of the pleadings and arguments raised, a substantial question of law was formulated as to whether the appellant is liable to reverse the CENVAT credit availed with respect to the inputs removed as such to a unit situated in the Special Economic Zone (SEZ) by using Form No. ARE-I, under Rule 3(5) of the CENVAT Credit Rules, 2004. 4. Brief facts are as follows. The appellant imported inputs for usage in the process of manufacturing, by availing exemption from payment of customs duty, as provided under the Customs (Import of Goods on Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 and in terms of Notification No. 25/2005-Cus. issued under the Customs Act. As the appellant was unable to use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-Cus., dated 27-12-2006 and No. 1001/8/2015-CX.8, dated 28-4-2015. 6. Contentions of the Senior Counsel were controverted by Adv. Thomas Mathew Nellimoottil, Senior Standing Counsel for Central Board of Indirect Taxes. According to him, the liability under Rule 3(5) of the CENVAT Credit Rules for payment of an equal amount of credit availed, is mandatory in a case where the inputs are removed as such from the premises of the appellant. It is contended that the exemption provided under Rule 6(6) of the CENVAT Credit Rules will not apply with respect to the inputs removed as such, without manufacturing any products. It is also contended that, the exemption contained in Rule 6(6) will apply only with respect to finished products, for which the excise duty is payable, in the manufacture of which the inputs are used. It is further contended that the exemption provided under the Special Economic Zones Act, 2005 (SEZ Act, for short) with respect to payment of duty of excise would apply only with respect to manufactured goods supplied from DTA to a unit in the SEZ. Learned Counsel also contended that, if the allowance of credit is permitted in the case of inputs transferred as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, Rule 6(6) is an exemption wherein the manufacturer who on exporting goods to a unit in SEZ is allowed to have credit on the duty paid on inputs, despite the liability cast upon the manufacturer for utilizing the inputs for manufacturing finished goods. It is contended that, such a provision is incorporated with a specific intention to exempt from imposition of export duties and taxes already suffered by the manufactured goods or the inputs used in the manufacture of such goods. It is pointed out that, Rule 6(6)(i) provides that the provisions of sub-rule (1) of Rule 6 shall not apply in cases where the excisable goods are removed without payment of duty to a unit in the SEZ. Rule 6(6)(v) provides that provisions of sub-section (1) shall not apply in cases where the excisable goods are cleared for export under bond in terms of provisions of the Central Excise Rules. It is pertinent to note that Rule 30 of the SEZ Rules provides the procedure for procurement of goods from DTA. It specifies that in a supply from a DTA to a unit in the SEZ, the unit shall clear the goods, as in the case of exports, either under bond or as duty paid goods under claim of rebate, on the cover of ARE-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exempted from reversal of credit availed on the duty paid on inputs. 11. Learned Standing Counsel appearing for the respondents contended that, the eligibility of a manufacturer for CENVAT Credit is governed by provisions of CENVAT Credit Rules, 2004 and unless the said Rules specifically exclude operation of Rule 3(5), the appellant cannot claim retention of the credit availed. Since the inputs were not used for manufacture, it is contended that, the appellant cannot be allowed to enjoy double benefit by retaining the CENVAT Credit taken on inputs, when the inputs as such was removed to a unit in the Special Economic Zone. It is further contended that the exemption under Rule 6(6) can be made applicable only in a case where the manufactured goods, which are liable for payment of excise duty is transferred to a unit in the SEZ. 12. On an active consideration, we take note of the definition of 'export' provided under the SEZ Act and also the exemptions provided therein under Section 26(c). Since the Legislature had intentionally included Section 51 to give an overriding effect to the SEZ Act, wherever it is inconsistent with any other law for the time being ..... X X X X Extracts X X X X X X X X Extracts X X X X
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