CESTAT stays demands on clearances to SEZ Developers

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CESTAT stays demands on clearances to SEZ Developers

AIT News Network

NEW DELHI. Principal Bench of CESTAT(Customs Excise and Service Tax Appellant Tribunal) has stayed the demands confirmed against M/s Nuchem Limited for non-payment of amount equal to 10 per cent of total value of goods on clearances to SEZ Developers. The manufacturer was asked to pay the amount under Rule 6 of CENVAT Credit Rules. The appellant challenged the Orders of Commissioner(Appeal) Gurgaon by filing Appeal No. E/3081, 3082 & 3083/09 in CESTAT.

Rule 6 (3) of CENVAT Credit Rules provided as under:

“Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow either of the following options, as applicable to him, namely:-

the manufacturer of goods shall pay an amount equal to ten per cent. of value of the exempted goods and the provider of output service shall pay an amount equal to ten per cent.(at present 6 per cent) of value of the exempted services”

The Bench found force in argument advanced by R.S.Sharma Advocate for the appellant that the reversal under Rule 6 of CENVAT Credit Rules is required to be done only when exempted goods are cleared by a manufacturer. Since the goods cleared from DTA to SEZ Developers were dutiable goods and were exported to SEZ under Bond under Rule 19 of Central Excise Rules; such clearances by the appellant were clearances of dutiable goods and not exempted goods. Finding a prima facie case; unconditional stay was granted to the appellant.

Similar demands have been issued to several manufacturers on the same grounds who are facing unwarranted litigation.

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