S.S. Garg ORDER
S.S. Garg, Member (J)
1. The present appeal is directed against the impugned order dated 27.3.2008 passed by the Commissioner (A) wherein Commissioner (A) has rejected the refund claimed by the appellant.
2. Briefly the facts of the present case are that the appellants are engaged in the manufacture of excisable goods falling under Chapter Heading 7308 90 90 of Central Excise Tariff Act, 1985. The appellants have filed an application for refund of Rs. 10,48,313/- being the duty paid on the goods cleared to M/s. Infosys Technologies Ltd., Chandigarh. M/s. Infosys Technologies Ltd., Chandigarh was declared as a Special Economic Zone (SEZ) unit by the Development Commissioner, Noida, Special Economic Zone, Ministry of Commerce and Industries vide letter No. 5/5/2006-Chg.SEZ/8797 dated 16.6.2006. The appellant cleared goods on payment of duty even after the receipt of approval by M/s. Infosys Technologies Ltd. as SEZ. The duty thus paid for the supplies made from 17.6.2006 to 16.11.2006 to M/s. Infosys Technologies in the absence of Domestic Procurement Certificate/ARE-1 was claimed as refund before the lower authority. The refund claim of the assessee was rejected by the Deputy Commissioner vide Order-in-Original dated 7.11.2007 on the ground that the appellant had not followed the prescribed provisions of SEZ Rules which came into force from 10.2.2006 and has not cleared the goods to SEZ Unit of M/s. Infosys Technologies under the cover of Duty Procurement Certificate/ARE-1. Aggrieved by the said order, the appellant filed appeal before the Commissioner (A) and the Commissioner (A) vide the impugned order dated 27.3.2008 has upheld the order and hence, the present appeal.
3. Heard both the parties and perused the records.
4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same is contrary to the statutory provisions. He further submitted that the appellant supplied the material on payment of duty and later filed the refund claim which was rejected for not following the prescribed procedure. He further submitted that the supplies were made to M/s. Infosys Technologies Ltd., which was a SEZ unit as approved by the Development Commissioner and M/s. Infosys Technologies vide their certificate dated 6.8.2007 have confirmed the receipt of the goods, their use for construction of M/s. Infosys Building in Chandigarh SEZ Unit and they have also claimed exemption from payment of excise duty. He further submitted that the rejection of claim is beyond the scope of show-cause notice. He further submitted that the supply of goods from DTA to SEZ unit is exempt from payment of duty under Rule 19 of Central Excise Rules, 2002. He also submitted that the CBEC Circular No. 29/2006-Cus. dated 27.12.2006 confirms that the supply of goods from DTA to SEZ unit is exempt from payment from duty under Rule 19 of Central Excise Rules, 2002 and that the provisions relating to export of goods under the Central Excise Act, 1944 and the Rules made thereunder may be applied in case of procurement of goods by SEZ unit. He also submitted that as per Rule 23 of SEZ Rules, 2006, which provides that supplies from DTA to a unit or developer for their authorized operations shall be eligible for export benefits as admissible under the Foreign Trade Policy. He also submitted that Section 11B provides for refund of duty of excise paid by the manufacturer, if such duty was not required to be paid. In support of this submission, he relied upon the following decisions:
i. Unimix Equipments Pvt. Ltd. : 2014 (312) ELT 957
ii. Toroid India Pvt. Ltd. vs. CCE, Delhi-III : MANU/CE/0100/2006 : 2006 (199) ELT 138 (Tri.-Del.)
iii. GAIL vs. CCE, Gwalior : 2006 (196) ELT 68 (Tri.-Del.)
5. On the other hand, the learned AR defended the impugned order and submitted that refund under Section 11B is rightly denied by both the authorities as the appellant has not followed the procedure as provided in the Notification No. 58/2003 : MANU/EXCT/0125/2003 dated 22.7.2003. He further submitted that in terms of SEZ Rules, the excisable goods can be supplied to SEZ under bond without payment of excise duty or on payment of duty and under claim for rebate of duty following Rule 18 of Central Excise Rules, 2002 under Rule 30 of SEZ, 2006 reads as follows:
30. Procedure for procurements from the Domestic Tariff Are:
(1) The Domestic Tariff Area supplier supplying goods to a Unit or Developer shall clear the goods, as in the case of exports, either under bond or as duty paid goods under claim of rebate on the cover of ARE-1 referred to in Notification No. 40/2001-Central Excise (NT) dated 25th June 2001 in quintuplicate bearing running serial number beginning from the first day of the financial year.
He also submitted that in this case the appellant has cleared the goods during the period from 17.6.2006 to 16.11.2006 on payment of duty and later filed the claim for refund. At that time SEZ Rules 2006 were already in operation, as it was notified on 10.2.2006 but the same has not been followed by the appellant for clearance of goods to M/s. Infosys Technologies Ltd. Learned AR further submitted that as per Notification No. 58/2003 which came into force on 15.8.2003, it is provided that the supplies made to SEZ are exempt from duty subject to the following conditions:
i. that such goods are removed from the factory or warehouse, as the case may be, in accordance with the procedure specified in rule 11 of the Central Excise Rules, 2002;
ii. that the said goods are supplied against a domestic procurement certificate issued to the special economic zone unit by customs authorities in the special economic zone;
iii. that the proof of export, duly certified by the Deputy Commissioner of Customs or the Assistant Commissioner of Customs in the special economic zone, is submitted to the officer-in-charge of the Central Excise range concerned, within a period of one month from the date of removal of such goods from the place of manufacture or production.
5.1 Learned AR further submitted that the case laws relied upon by the appellants are not applicable to the present case as all the decisions are relating to the EOU and not to SEZ, which is a Special Legislation.
6. After considering the submissions of both the parties and perusal of the material on record, I find that the appellants have made the supplies to M/s. Infosys Technologies Ltd. which was a SEZ unit during the relevant time and the said supplies were made on payments of duty and later filed refund claim for the same on the ground that any supplies made to SEZ unit is not taxable. But the appellants have failed to follow the procedure which is prescribed in the SEZ Act for claiming exemption. Further appellant have also not followed the procedure as prescribed in Notification No. 58/2003 which was in force at that point of time. The learned Commissioner has considered all the grounds which were raised by the appellant and has rightly come to the conclusion that the appellant have not followed the prescribed procedure. In this regard, it is pertinent to reproduce the findings of the Commissioner, which is reproduced herein below. In this case, the appellant has cleared the goods during the period from 17.6.2006 to 16.11.2006 on payment of duty and later filed the claim for refund. However, SEZ Rules, 2006 were already in vogue, as it was notified on 10.2.2006 and the same have not been followed by the appellant for the clearance. The lower authority has rejected the refund claim on the grounds that they are not eligible for refund as there was no exemption available for such clearance excepting claiming of rebate which is not admissible since the appellant has not followed the prescribed procedure for the clearance of goods to SEZ unit. Here, unlike clearance to 100% EOU, no exemption is available for clearance made to SEZ's. The only option is to pay, duty and claim rebate. Export under bond or under claim for rebate of duty cannot be equated with an exemption from payment of duty granted under a notification issued under Section 5A of the Central Excise Act, 1944. Therefore, the goods at the time of their clearance from the place of manufacture were rightly chargeable to duty as per Central Excise Act, 1944 and the same has been discharged by the appellant. However, the appellant failed to follow the procedure set out to SEZ's. Even though Section 11B provides for claiming of refund of duty paid within one year from the relevant date, a refund is admissible provided the goods are exempt from payment of duty leviable under statute. As already observed above, there is no exemption notification granting waiver from payment of duty leviable. The clearances to SEZ under bend or under claim for rebate of duty is subject to observance of various conditions. Neither before the lower authority nor during these appeal proceedings the appellant have demonstrated that barring the procedural formalities they; satisfy other conditions covering the clearance to SEZ. Since the goods were paid on payment of duty they should have followed the correct procedure even to claim rebate, if not refund. Refund claim cannot be converted into rebate claim in the absence of following prescribed procedure. Therefore, the lower authority was right in rejecting the refund claim. His order needs to be upheld.
Therefore, keeping in view my discussions above, I am of the opinion that appellants are not entitled to refund of the duty paid as they have not followed the procedure prescribed under law and therefore, I dismiss the appeal of the appellant.
(Order was pronounced in Open Court on 15/05/2017.)
© Manupatra Information Solutions Pvt. Ltd.