TMI Blog2021 (2) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... ded to all types of goods and the width of language employed would include diesel/HSD so long as the goods are used towards/in authorised operations and excepting where the goods are prohibited. Thus, there is no justification in law to deny exemption to HSD/diesel, used as it is, in the running of the capital equipment deployed in the manufacturing process. The preamble to the Act states that the SEZ Act provides for the establishment, development and management of the Special Economic Zones for the promotion of exports and for matters connected therewith or incidental thereto - The Supreme Court in the case of BAJAJ TEMPO LIMITED VERSUS COMMISSIONER OF INCOME-TAX [ 1992 (4) TMI 4 - SUPREME COURT] considered the interpretation to be accorded to a provision granting exemption, concluding that where the exemption was intended for the encouragement of specified sectors, activities or areas, the interpretation of such provisions should be liberal and not narrow. The respondent has raised the plea of alternate remedy and states that the petitioner ought to have exhausted the remedy of approaching the Unit Approval Committee and Board of Approval for addressing its grievances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-under and for the establishment of your unit at L T shipbuilding Ltd. Heavy Engineering sector SEZ at Kattupalli Village, Ponneri Taluk, Thiruvallur District in the State of Tamil Nadu for undertaking authorized operations, namely, Manufacture, assembly, quality assurance/quality control, test trial and load out of Offshore platforms and products: Piles, Jackets, Topsides and parts thereof, Floating production and storage units: FPSO, Semi-submersible, TLP, SPAR, Jackup Rig and parts thereof as under:- Authorized Operations:- a) Items (s) of manufacture: Manufacture, assembly, quality assurance/quality control, test trial and load out of Offshore platforms and products: Piles, Jackets, Topsides and parts thereof, Floating Production and storage units: FPSO, Semi-submersible, TLP, SPAR, Jack-up Rig and parts thereof. b) Service activities: 1. Setting up, operation, maintenance and expansion of the unit. . . . . . . . . Asst. Development Commissioner For Development Commissioner 4. The petitioner sought a clarification from the competent authority on 02.11.2016 as to the eligibility of HSD/fuel for exemption from Central Excise Dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . . The present writ petition is filed challenging the aforesaid order. 8. The admitted facts are (i) the petitioner holds an approval for the manufacture, assembly, quality control, test trial and load out of off-shore platforms and products (ii) the authorised operations of the petitioner comprise of manufacturing activity as defined under Section 2(r) of the Act, extracted below: Section 2(r): manufacture means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, cutting, polishing, blending, repair, remaking, re-engineering and includes agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining. (iii) It deploys equipment in the eligible manufacturing activity, such equipment being self-owned as well as hired from contractors. (iv) Such equipment constitute capital goods as defined below: Section 2(e): capital goods means any plant, machinery, equipment or accessories required for manufacture or production, either directly or indir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess or procure from Domestic Tariff Area after availing export entitlements or procure from other Units in the same or other Special Economic Zone or from Export Oriented Unit or Software Technology Park unit or Electronic Hardware Technology Park unit or Bio-technology Park unit, all type of goods, including capital goods (new or second hand), raw materials, semi-finished goods, (including semi-finished Jewellery) component, consumables, spares goods and materials for making capital goods required for authorized operations except prohibited items under the Import Trade Control (Harmonized System) Classifications of Export and Import Items: Provided that exemptions from payment of duty, taxes or cess, drawbacks and concessions on all types of goods and services, required for setting up and maintenance of the factory building, allowed to a unit shall also be available to the contractors appointed by such unit and all the documents in such cases shall bear the name of the unit along with the contractor and these shall be filed jointly in the name of the unit and the contractor: Provided further that the unit shall be responsible and liable for proper utilization of such goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unning the equipment, the claim was rejected. 16. Section 2(g) defines a consumable as being any item, (including fuels, high speed diesel oil, light diesel oil and other such petroleum products) required in the manufacturing process, which may or may not be substantially or totally consumed during the process but does not necessarily form part of the end product. In the present case, Fuel/HSD is used to run the capital equipment deployed directly in the manufacturing process. No exemption is sought for fuel used in running of vehicles/other equipment not connected with the eligible activity. The capital equipment deployed have a direct nexus with the manufacturing process as, in their absence, the equipment cannot be run and there would, consequently, be no manufacture/eligible activity. HSD/fuel is thus consumed in the running of the capital equipment which is intrinsic to the process of manufacture itself. The respondent has itself accepted this position as exemption is granted with demur to fuel/HSD used in running vehicles owned by the petitioner and denied only to leased equipment. 17. The argument of the revenue also ignores the fact that the exemption under Rule 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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