M/S. Kapilansh Dhatu Udyog Pvt. Ltd vs Commissioner Of Central Excise, Nagpur

[Arising out of Order-in- Appeal No. SR/332/NGP/2009 dtd. 14/12/2009 passed by the Commissioner (Appeals) Central Excise & Customs, Nagpur]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy: seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities? =======================================================

M/s. Kapilansh Dhatu Udyog Pvt. Ltd. : Appellants

VS

Commissioner of Central Excise, Nagpur : Respondent

Appearance

Shri. P.V. Sadavarte, Advocate for the Appellant Shri. Sanjay Hasija, Superintendent (A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 27/2/2015 Date of decision: 27/2/2015

ORDER NO.

Per : Ramesh Nair

The appeal is directed against Order-in- Appeal No. SR/332/NGP/2009 dated 14/12/2009 passed by the Commissioner (Appeals) Central Excise & Customs, Nagpur, wherein appeal of he appellant was rejected by upholding the order-in-original No. 20/2009/DEM/DN-II dated 30/6/2009. The fact of the case is that the appellant is engaged in the manufacture of Cast Iron Pipes. During the month of January 2008, the appellant cleared the goods viz. CI Pipes, total quantity of 107.980 MT and valued of Rs. 34,54,251/- to M/s. Serene Properties Private Limited, SEZ Developer without payment of duty in pursuance of instructions contained under M.F.(D.R.) Circular No. 29/2006-Cus dated 27/12/2006. The Revenue contended that the clearances are not covered under clause (i) to (vii) of sub-rule(6)(3)(i) of Cenvat Credit Rules, 2004 and as such appellant have to pay amount equal to value of the exempted goods under Rule (6) (3)(i) of Cenvat Credit Rules, 2004. Accordingly for demand of Rs. 34,54,217/-, interest and penalty of equal amount was confirmed. Being aggrieved, appellant filed appeal before the Commissioner(Appeals), which was rejected on the ground that the clearances to a unit in SEZ was inserted by notification No. 50/2008-CE(NT) dated 31/12/2008 in rule (6) in sub rule (2) of Cenvat Credit rules, 2004. Accordingly prior to said amendment clearances made in the month of January 2008 would attract payment of 10% of value of the goods supplied to SEZ. Aggrieved by the aforesaid impugned order the appellant is before me.

2. Shri. P.V. Sadawarte, Ld. Counsel for the appellant submits that though the specific entry in relation to clearances made to SEZ was inserted in the Cenvat Credit Rules by Notification No. 50/2008-CE(NT) dated 31/12/2008 but by virtue Section (2)(m) of SEZ Act, 2005 for all purposes the supply made to SEZ was considered as export. It is his submission that right from the SEZ Act, 2005 supply made to SEZ has been treated as export. SEZ Act, 2005 being having overriding effect on all other acts subsequent amendment in Cenvat Credit Rules, 2004 does not take away benefit of export which was already mandated under the SEZ Act, 2005. In support of his submission he placed reliance on following judgments:

(a) Union of India Vs. Steel Authority of India Ltd.[2013(297) E.L.T. 166(Chattisgarh)].

(b) Ultratech Cement Ltd. Vs. Commissioner of Central Excise, Nagpur[2015(315) E.L.T. 238(Tri- Mumbai).

3. On the other hand, Shri. Sanjay Hasija, Ld. Superintendent (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He placed reliance on following judgments:

(a) Indye Chemicals, Ahmedabad Vs. Collector of Central Excise, Ahmedabad[1986(25) E.L.T. 318(Tribunal).

(b) Colgate Palmolive(India) Ltd. Vs. Commissioner of Customs, Patna[2003(160) E.L.T 868(Tri- Kolkata)]

On the basis of above judgments he submits that the amendment made by notification can not be given retrospective effect therefore amendment made in the Cenvat Credit Rules can not be applied in the present case retrospectively in respect of clearance made in January 2008. Therefore he pleaded that Ld. Commissioner (Appeals) rightly upheld the demand and impugned order is sustainable.

4. I have carefully considered the submissions made by both the sides and perused the records.

5. The fact is not under dispute that appellant supplied the goods without payment of duty to M/s. Serene Properties Private Limited, which is an SEZ unit in terms of Section 2(m) of SEZ Act, 2005. The goods supplied to SEZ is clearly treated as export, therefore in view of this SEZ Act, 2005 there is no dispute with the goods supplied to unit in SEZ is export for all purposes. Therefore even though in Rule (6) of Cenvat Credit Rule the amendment in respect of supplies made to SEZ was made on 31/12/2008 but since supply were already in nature of export only it was entitled for the all the benefits provided in respect of export of goods. Very same issue came up before the Honble High Court of Chhattisgarh in case of Union of India Vs. Steel Authority of India Ltd.(Supra) wherein the question involved were :

13. We have heard counsel for the parties. This case was admitted on 30-1-2012 on the following questions of law:

(i) Whether the Tribunal erred in holding the amendment notification 50/2008, dated 31-12-2008 as retrospective, when admittedly the said notification provides for they shall come into force on their publication in official gazettee?

(ii) Whether the supplies made to SEZ developers prior to 31-12-2008 can also be treated as exempted goods for the purpose of Rule 6(3) (b) of the Cenvat Credit Rules and can further be treated as exports under Section 2(18) of the Customs Act as well as under Clause (V) OF Rule 6(6) of Cenvat Credit Rules, 2004?

However, the main point involved is, as mentioned in the second paragraph of the judgment.

Wherein Honble High Court concluded as under:

53. Our conclusion are as follows:

(a) The Excise Duty is imposed on the manufacture of the product that is to be consumed in the country; whereas a customs duty is imposed on the product that is manufactured within the country but is to be used outside the country i.e. exported as well as manufactured outside the country and brought into the country for use i.e. imported;

(b) The amended rule is merely clarificatory, corrects an obvious mistake, removes discrimination between developers and units in spetial area zones. It merely clarifies or explain the existing law of providing non-imposition of excise duty on goods that are held to be export under the Spatial Zone Act;

(c) The substituted sub-rule6(6)(i) is enforced from the date the 2004-Rules come into force.

53. In view of above, both the substantial questions of law are decided against the Department The appeal has no merit. It is dismissed.

Following the above judgment the coordinate bench of this Tribunal also taken similar view in Ultratech Cement Ltd. Vs. Commissioner of Central Excise, Nagpur (supra) case wherein Tribunal held as under:

8. Having considered the rival contentions, we are in agreement with the reasoning and findings recorded by the Honble High Court of Chhattisgarh in Steel Authority of India Ltd. (Supra) holding that the amendment, under Rule 6(6) (i) made on 31-12-2008 is clarificatory in nature and is applicable retrospective from the date when the 2004 rules were implemented. Accordingly, the impugned orders are set aside and the appeals are allowed with consequential relief, if any, in accordance with law.

From the above judgments, issue involved in the present case stands settled that the appellant is not required to pay 10% in terms of Rule 6(3) (b) of Cenvat Credit Rules, 2004 therefore the demand confirmed by the original authority and upheld by the Commissioner(Appeals) is liable to be dropped. In view of my above discussion, the impugned order is not sustainable, hence the same is set aside. The appeal is allowed.

(Operative part pronounced in court)

Ramesh Nair Member (Judicial)

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