Whether input credit required to be reversed on the clearances made to SEZ unit?

PJ/Case Laws/2012-13/1381

Case:-COMMISSIONER OF CENTRAL EXCISE, CHENNAI-II Vs M/s WABCO TVS (INDIA) LTD.

Citation:-2012-TIOL-1819-CESTAT-MAD

Brief facts:-The facts of the case are that the respondents cleared inputs and capital goods to a unit in SEZ without reversal of input credit taken by them. The lower appellate authority relying on the decision of the Sujana Metal Products Ltd. reported in 2011 (273) ELT 112 = (2011-TIOL-1173-CESTAT-BANG)held that the assessee for the clearance of the input or capital goods to an SEZ are to be treated as export of dutiable goods. Therefore, they are not liable to reverse the CENVAT credit. Against the said holding, the Revenue is in appeal.

Appellant contention:- The appellant relies on the decision of Essar Ltd. reported in 2010 (249) ELT 3 (Guj.) and Tirupati Udyog Ltd. Vs. Union of India reported in 2011 (272) ELT 209 (A.P).They further submitted that as per Rule 3(5) of the CENVAT Credit Rules 2004, the respondents are required to reverse the CENVAT credit availed by them on the clearances. Therefore, when the provision of Rule 3(5) is clear they are required to reverse the same.

Respondent contention:- The respondent relies on the decision of the Sujana Metal Products Ltd. reported in 2011 (273) ELT 112held that the assessee for the clearance of the input or capital goods to an SEZ are to be treated as export of dutiable goods. Therefore, they are not liable to reverse the CENVAT credit.

Reasoning of judgment:-In the case of Sujana Metal Products (supra), this Tribunal has considered the decision of Essar Ltd. (supra) relied upon by the appellant and thereafter this Tribunal held that for clearances made to SEZ are to be treated as export and on such clearances the assesses are not required to reverse the input credit.

Following the precedent decision of this Tribunal, it was held that the Commissioner (Appeals) has taken a right decision by holding that the clearances are export of dutiable goods. Therefore, they are not required to reverse the CENVAT credit and there is no any infirmity in the order and accordingly appeal filed by the Revenue is dismissed.

Decision:-Appeals dismissed.

Comment:-The analogy drawn from this case is that input credit is not required to be reversed under Rule 3(5) when clearances are made to SEZ unit as it amounts to export.

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PJ/Case Laws/2012-13/1381

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