TMI Blog2020 (1) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... dment within the Rule 6(6)(i) is applicable retrospectively whereas as per the Department, it is applicable prospectively. This issue is now no more res integra in view of the decision of the Karnataka High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX AND THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S FOSROC CHEMICALS (INDIA) PVT LTD AND OTHERS [ 2014 (9) TMI 633 - KARNATAKA HIGH COURT] wherein it has been held that the amendment carried out in Rule 6(6) by way of Notification No.50/2008 was retrospective. The impugned order is not sustainable in law - appeal allowed - decided in favor of appellant. - Central Excise Appeal No. 1021 of 2009 - Final Order No. 20039/2020 - Dated:- 9-1-2020 - HON'BLE SHRI S.S GARG, JUDICIAL MEMBER AND HON'BLE SHRI P. ANJANI KUMAR, TECHNICAL MEMBER Shri B.N. Gururaj Adv For the Appellant Shri Rama Holla, Superintendent (AR) For the Respondent ORDER Per: S.S GARG The present appeal is directed against the impugned order dt. 26/10/2009 passed by the Commissioner of Central Excise whereby the Commissioner h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eveloper during the months of August 2008 and September 2008 should not be demanded from them in terms of the provisions of Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944; ii. Interest should not be demanded from them in terms of Rule 14 of CENVAT Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944 and iii. Penalty should not be imposed on them in terms of Rule 15(1) of CENVAT Credit Rules, 2004. 2.2. The appellant filed detailed reply to the show-cause notices and raised the defence in support of their claim that supplies to the SEZ developer are exports and entitled to all exports benefits. The appellant in their reply have also given the decisions of various courts whereby their case is covered in their favour. After considering the submissions of the appellant, the Commissioner has rejected the defence of the appellant and confirmed the demand. 3. Heard both sides and perused the records. 4. Learned counsel for the appellant submitted that the impugned order is not sustainable as the same has been passed without properly app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been held by the Hon ble High Court that the amendment carried out in Rule 6(6)(i) by way of Notification No.50/2008-CE is applicable retrospectively. 5. On the other hand, the learned AR defended the impugned order and submitted that the appellant had made clearances to M/s. Vikas Telecom Ltd. which is a SEZ developer without payment of Central Excise duty and availed the cenvat credit on the inputs used for the manufacture of such goods. He further submitted that the appellant did not maintain a separate account of inputs used for the manufacture of dutiable goods and exempted goods. Therefore the demand of 10% of the price of the goods supplied to SEZ developer is sustainable in view of Rule 6. He further submitted that subsequently the Rule 6(6)(i) was amended by Notification No.50/2008 to include the supplies made to SEZ developers also; but the amendment carried out by the Notification No.50/2008 is not available to the appellant since the period of dispute is prior to this amendment and the said amendment is prospective in nature and cannot be applied retrospectively. 6. After considering the submissions of both the parties and perusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les 2004 which provide the said benefit prior to amendment reads as under : 6. Obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services. .. Sub-rule (6) clause (i) reads as under : Sub-rule (6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either- (i) cleared to a unit in a special economic zone. 6. As is clear from the aforesaid provision, the benefit of non-reversal/ maintenance of separate inventory was extended when the excisable goods were cleared to a unit in a special economic zone. The said benefit was not extended when the excisable goods removed without payment of duty or cleared to a developer of a special economic zone for their authorized operation. However, in exercise of the powers conferred by Section 37 of the Central Excise Act, 1944 (1 of 1944) and Section 94 of the Finance Act, 1994 (32 of 1994), the Central Government amended the Cenvat Credit Rules, 2004 by issue of a notification as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red words had been written into the earlier Act with pen and ink and the old words scored out so that there is no need to refer to the amending Act at all. 10. Yet another Constitution Bench of the Hon ble Supreme Court in the case of Shyam Sunder Others v. Ram Kumar Another reported in AIR 2001 SC page 2472, while dealing with the question whether a substituted provision necessarily means the amended provision is retrospective in nature has held as under : A substituted section in an Act is the product of an amending Act and all the effects and consequences that follow in the case of an amending Act the same would also follow in the case of a substituted section in an Act. 11. In fact, the Division Bench of this Court in the case of SHA Chunnilal Sohanraj v. T. Gurushantappa reported in 1972 (1) MYS. L.J. PAGE 327 DB has held as under : When an amending Act has stated that the old sub-section has been substituted by the new sub-section the inference is that the Legislature intended that the substituted provision should be deemed to have been part of the Act from the very inception. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision of the Special Economic Zones Act, 2005. This section therefore overreaches and eclipses the provisions of any other law containing provisions contrary to the SEZ Act, 2005. Though the definition of the word export in the SEZ Act, in Sec. 2(m) included supply of goods to a Unit or Developer , in clause (i) of sub-rule (6) of Rule 6 of the Cenvat Credit Rules, 2004 the word Developer was conspicuously missing and only unit was included before the 2008 amendment. It is in that context the aforesaid amendment by Notification No. 50/2008 C.E. (N.T), dated 31-12-2008 was brought in, to clarify the doubt. As the said amendment is clarificatory in nature, that is the reason why it was brought by way of substitution . The effect of the said substitution is that the Cenvat Rules 2004 are to be read and construed as if the altered words had been written into the Rules of 2004 with pen and ink and the words to a developer of the SEZ for their authorized operation was there from the inception. This is the understanding of the Government as is also clear from the circular issued by the C.B.E. C. bearing No. 29/2006-Cus., dated 27-12- 2006 wherein clause 4 reads as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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