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CX – Substitution of Rule 6(6)(i) of CCR, 2004 by Notfn 50/2008-C.E.(N.T.) is clarificatory in nature and has to be given retrospective effect: HC

2019-TIOL-1542-HC-MAD-CX

IN THE HIGH COURT OF MADRAS

Civil Miscellaneous Appeal No.1907 of 2019

COMMISSIONER OF CENTRAL EXCISE
CHENNAI-IV (NOW RE-DESIGNATED AS THE COMMISSIONER OF GST
AND CENTRAL EXCISE), AT NEWRY TOWERS, PLOT NO 2054
1ST BLOCK, 2ND AVENUE, 12TH MAIN ROAD, ANNA NAGAR
CHENNAI – 600040

Vs

M/s KONE ELEVATORS INDIA PVT LTD
NO 50, VANAGARAM ROAD, AYANAMBAKKAM
CHENNAI – 600095

Dr Vineet Kothari & C V Karthikeyan, JJ

Dated: July 08, 2019

Appellant Rep by: Ms R Hemalatha
Respondent Rep by:
 Mr Krishna Srinivasan for M/s Ramasubramaniam

CX – Both the parties at the Bar submitted that the controversy involved in this case is covered by a recent judgment passed by a Coordinate Bench of this Court in case of S.P.Fabricators Pvt Ltd. and Others in which it is held that the substitution of Rule 6(6)(i) of CCR, 2004 by Notfn 50/2008-C.E.(N.T.) is clarificatory in nature and has to be given retrospective effect and therefore, the excise duty exemption is not only available to SEZ Units but also to the Developers of SEZ – The appeal filed by Revenue is without any merit and is dismissed: HC

Appeal dismissed

Case laws cited:

The Commissioner of Central Excise, Chennai II Commissionerate -Vs- S.P.Fabricators Pvt Ltd., and Others reported in MANU/TN/6295/2018… Para 1

Commissioner of Central Excise & Sales Tax, Bangalore -Vs- Fosroc Chemicals (India) Pvt.Ltd – 2014-TIOL-1609-HC-KAR-CX… Para 2

Commissioner of Central Excise Bangalore-II -Vs- ECIE Impact Pvt Ltd., reported in MANU/KA/2216/2018… Para 2

JUDGEMENT

Per: Dr Vineet Kothari:

Both the learned counsel at the Bar submitted that the controversy involved in this case is covered by a recent judgment passed by a Coordinate Bench of this Court in the case of “The Commissioner of Central Excise, Chennai II Commissionerate -Vs- S.P.Fabricators Pvt Ltd., and Others” reported in MANU/TN/6295/2018, in which the Coordinate Bench of this Court has held that the substitution of Rule 6(6)(i) of CENVAT Credit Rules, 2004 by the Notification No.50/2008-C.E.(N.T.) dated 31.12.2008 is clarificatory in nature and has to be given retrospective effect and therefore, the excise duty exemption is not only available to the SEZ Units but also to the Developers of SEZ. The relevant portion of the judgment of the Coordinate Bench of this Court is quoted below for ready reference.

“20. The Hon’ble Supreme Court in the case of Zile Singh vs. State of Haryana and Others [(2004) 8 SCC pg.1 brought about the distinguishing features between ‘substitution’ and ‘supersession’ and explained the same as under:-

“24. The substitution of one text for the other pre-existing text is one of the known and well-recognised practices employed in legislative drafting. “Substitution” has to be distinguished from “supersession” or a mere repeal of an existing provision.

25. Substitution of a provision results in repeal of the earlier provision and its replacement by the new provision (see Principles of Statutory Interpretation, ibid.,p.565). If any authority is needed in support of the proposition, it is to be found in West U.P.Sugar Mills Assn.v. State of U.P. [(2002)2 SCC 645], State of Rajasthan v. Mangilal Pindwal [(1996) 5 SCC 60], Koteswar Vittal Kamath v. K.Rangappa Baliga and Co.[(1969)1 SCC 255] and A.L.V.R.S.T.Veerappa Chettiar v. S.Michael [AIR 1963 SC 933]. In West U.P.Sugar Mills Assn. Case a three Judge Bench of this Court held that the State Government by substituting the new rule in place of the old one never intended to keep alive the old rule. Having regard to the totality of the circumstances centring around the issue the Court held that the substitution had the effect of just deleting the old rule and making the new rule operative. In Mangilal Pindwal case, this Court upheld the legislative practice of an amendment by substitution being incorporated in the text of a statute which had ceased to exist and held that the substitution would have the effect of amending the operation of law during the period in which it was in force. In Koteswar case, a three-Judge Bench of this Court emphasised the distinction between ‘supersession’ of a rule and ‘substitution’ of a rule and held that the process of substitution consists of two steps: first, the old rule is made to cease to exist and, next, the new rule his brought into existence in its place.”

21. We may also note that Circular No.29/2006-Cus, dated 27.12.2006, issued by Central Board of Excise & Customs, New Delhi, pertaining to implementation of Special Economic Zone Act, 2005 and Special Economic Zone Rules, 2006, has notified as under:

“4. In the light of the aforesaid provisions, with effect from 14.3.2006, Chapter XA of the Customs Act, 1962, the SEZ Rules, 2003, the SEZ (Customs Procedure) Regulations, 2003, and the exemption Notification No.58/2003-C.E., dated 22.7.2003, regarding the supply of goods to SEZ units & SEZ developers have become redundant. Consequently the supplies from DTA to a SEZ unit, or to SEZ developers for their authorized operations inside a SEZ notified under sub-section (1) of Section 4 of the Act, may be treated as in the nature of exports.

5. The existing SEZs, i.e., the ones notified under Section 76A of Chapter XA of the Customs Act, 1962, shall be deemed to have been notified under Section 4 hof the Act. Supplies from DTA to SEZ shall be exempt from payment of any Central Excise duty under Rule 19 of Central Excise Rules, 2002. Similarly, such supplies shall be eligible for claim of rebate under Rule 18 of Central Excise Rules, 2002, subject to the fulfilment of conditions laid thereunder. The provisions relating to exports under Central Excise Act, 1944 and rules made thereunder may be applied, mutatis mutandis, in case procurement by SEZ units and SEZ developer from DTA for their authorized operations.”

22. In the light of the above, we are in respectful agreement with the decision in the case of Steel Authority of India Ltd., and in the case of FOSROC Chemicals India (P) Ltd. The learned counsel for the Revenue pointed out that the decision in the case of Steel Authority of India has been challenged before the Hon’ble Supreme Court and the same is pending as well as the decision of the Tribunal in the case of Sujana Metal Products Limited, which was confirmed by the High Court of Andhra Pradesh in the case of Commissioner vs. Sujana Metal Products Ltd [2016 (342) E.L.T.A115 (A.P.], Therefore, we are inclined to dispose of this appeal by answering the Substantial Questions of Law framed for consideration in favour of the Respondent/assessee and at the same time giving liberty to the Revenue, as granted by the High Court of Karnataka in Central Excise Appeal No.54 of 2015, dated 24.02.2016 and in the case of Principal C.C.E.Bangalore-I vs. Power Control Equipments (Unit-II).

23. In the result, the appeal filed by the Revenue is dismissed and the Substantial Questions of Law framed for consideration are answered in favour of the respondent/assessee. However, in the event the Revenue succeeds in the appeals, which are now pending before the Hon’be Supreme Court and different view is taken, the questions may be required to be considered by the competent authority and at that stage the rights and contentions of both sides shall remain open. It is made clear that either party will not be entitled to raise the plea of limitation in such a contingency. No costs.”

2. Learned counsels at Bar have also brought to the notice of this Court certain other judgments of the Karnataka High Court also viz., “Commissioner of Central Excise & Sales Tax, Bangalore -Vs- Fosroc Chemicals (India) Pvt.Ltd.” reported in 2014 SCC Online Kar 12806 = 2014-TIOL-1609-HC-KAR-CX, and “Commissioner of Central Excise Bangalore-II -Vs- ECIE Impact Pvt Ltd., reported in MANU/KA/2216/2018.

3. In view of the aforesaid, the present appeal filed by the Revenue is without any merit and is liable to be dismissed. The same is accordingly dismissed. No costs.

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