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Supply of final product to SEZ ‘developer’ – Period Prior to 31-12-2008 – No reversal of CENVAT credit under Rule 6 – Notification No. 50/2008-C.E.(N.T.) dated 31-12-2008 held retrospective.
Facts:
Assessee – manufacturer made clearance of their final products to SEZ developers without payment of duty against letters of undertaking (LUT) during the period January, 2006 to December, 2006. CENVAT Credit of the duty paid on inputs attributable to supplies made to SEZ developer was not reversed. The revenue sought reversal of appropriate CENVAT Credit under Rule 6 of the CENVAT Credit Rules, 2004.
The Assessee filed an appeal before the CESTAT, Bangalore and argued that in view of amendment carried out in Rule 6(6)(i) vide Notification No.50/2008-CE(NT) dated 31-12-2008, no reversal was required in case of clearances to SEZ Developers and the said notification is clarificatory and therefore has retrospective applicability. Tribunal allowed the appeal. Aggrieved by the said order, the revenue appealed before the High Court.
Held:
The High Court observed that section 51 of the Special Economic Zones Act, 2005 overrides the provision of all other laws for the time being in force. 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 section 2(m) included supply of goods to a ‘Unit’ or ‘Developer’, in Rule 6(6)(i) 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 CE (N.T) dated 31-12-2008 was brought in, to clarify the doubt. Further, by reason of the aforementioned amendment no substantive right has been taken away nor has any penal consequence been imposed. Only an obvious mistake was sought to be removed thereby. Therefore, it was held that the said amendment is clarificatory in nature. This was also clarified from Clause 4 of CBEC circular bearing No.29/2006-Cus. dated 27-12-2006.
