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TMI Blog2020 (1) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... ant with the Range Officer, it was noticed that the appellant has cleared the finished goods at 'nil' rate of duty, to their customer viz. M/s. Vikas Telecom Ltd., Devarabeesanahalli, Varthur Hobli, Bangalore - 560 037, in terms of the provisions of Rule 6(6) of CENVAT Credit Rules, 2004 claiming that the goods were cleared to an SEZ unit. However, a detailed verification of the records by the officers revealed that the said M/s. Vikas Telecom Ltd., was not a SEZ unit but a SEZ developer. The total value of the goods cleared by the assessee to M/s. Vikas Telecom Ltd. without payment of duty during the period 04/12/2007 to 31/03/2008 is Rs. 5,44,20,000/-. Appellants were issued two show cause notices. The allegation in both the show-cause notices are stated herein below:- Show-cause notice dt. 30.07.2009:- i. An amount of Rs. 54,42,000/- being the amount equivalent to 10% of the value of the excisable goods amounting to Rs. 5,44,20,000/- cleared to SEZ developer during the period from 04.12.2007 to 31/03/2008, should not be demanded from them in terms of the provisions of Rule 14 of the CENVAT Credit Rules, 2004 read with proviso to Section 11A of the Central Excise Act, 1944. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10% amount from the appellant as they had not maintained separate account for inputs used in its manufacture. He also submitted that supply to SEZ developer cannot be equated to removal of exempted goods as defined under Rule 2(d) of the CENVAT Credit Rules, 2004. He also submitted that sub-rule 6 of Rule 6 excludes exports from the operation of Rule 6(1) and when the supplies are under LUT bond without payment of duty, the credit taken is saved under clause (v) of Rule 6(6). He also submitted that when the law treats supplies to SEZ developer as exports, the Department cannot compel the appellant to follow Rule 6(2) of the CCR. He also submitted that though SEZ Act and Rules recognizes that DTA supplies to the developer as exports, the exclusion clause (i) of sub-rule 6 of Rule 6 contained only SEZ unit. The Revenue realized this lapse and amended the clause to include SEZ developer also by Notification No.50/2008-CE(NT) dt. 31/12/2008. He further submitted that the amendment carried out vide Notification No.50/2008 is applicable retrospectively as the said amendment is by way of substitution whereas the Commissioner in the impugned order has held that this amendment is prospectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) by way of notification No.50/2008, it is only the SEZ unit which was mentioned in the Rule 6(6) for exclusion and not SEZ developer. Subsequently vide the said Notification No.50/2008, the said notification has amended the Rule 6(6)(i) of CCR by substituting the word cleared to unit in a Special Economic Zone or a developer in SEZ for their authorized operations. As per the appellant, this amendment 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 Fosroc Chemicals (India) Pvt. Ltd. wherein it has been held that the amendment carried out in Rule 6(6) by way of Notification No.50/2008 was retrospective. Here, it is pertinent to reproduce the substantial question of law framed by Hon'ble High Court in para 4 of the said judgment and subsequent findings by the Hon'ble High Court which is reproduced herein below:- 4. The question that arises for our consideration in these appeals are, Whether the Third amendment of 2008 to the Cenvat Credit Rules, 2004, extending the benefit of exemption from reversal of Cenv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eared to a "developer" of a special economic zone for their authorised operation. 7. The contention of the Revenue is that the statutory provision of the notification referred to supra became effective from 31-12-2008 as per para 1(2) of the notification issued by the Government of India and therefore, the finding of the Tribunal that the notification is effective retrospectively from 10-9-2004 is beyond the scope of statutory provision and therefore, the impugned order is liable to be set-aside. 8. Per contra, the learned counsel appearing for the assessee supported the impugned order. 9. What is the effect of "substitution" of a provision in the place of an existing one is no more res-integra. The Constitution Bench of the Hon'ble Apex Court in the case of Shamarao V. Parulekar v. The District Magistrate, Thana, Bombay & Others reported in AIR 1952 SC page 324, dealing with the scope of substitution of a provision by way of amendment held as under :- "When a subsequent Act amends an earlier one in such a way as to incorporate itself or a part of itself into the earlier, then the earlier Act must thereafter be read and construed (except where that would lead to a repug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be liberally consumed." 13. The Parliament has enacted the Special Economic Zones Act, 2005 (The SEZ Act for short) to provide for the establishment, development and management of the Special Economic Zones for the promotion of exports and for matters connected therewith or incidental thereto. Section 53 of the Act declares 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. The word "export" has been defined under Act at Section 2(m). According to the definition of the word export, vide Section 2(m)(ii) "export" means supplying goods or providing services, from the Domestic Tariff Area to a Unit or Developer. Such exports were exempted from duty of Central Excise under Section 26 of the SEZ Act, 2005 and consequently application of Cenvat Credit Rules. Section 151 of the Special Economic Zones Act, 2005, overrides the provision of all other laws for the time being in force, notwithstanding anything inconsistent therein with the provision of the Special Economic Zones Act, 2005. This section therefore overreaches and eclipses the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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