SEZ units entitled for exemption from CVD on goods cleared in DTA notwithstanding bar U/s. 5A of Central Excise Act, 1944 – Omission to omit reference to SEZ is legislative oversight
Roxul Rockwool Insulation India Pvt. Ltd. (the Petitioner )was engaged in the manufacture of stone-wool insulation products (Impugned goods) and their manufacturing unit was located at Dahej Special Economic Zone (SEZ). The Impugned goods were exported as well as sold in the local market, subject to certain conditions imposed by the Government.In terms of Section 3(1) of the Customs Tariff Act, 1975 (the Customs Tariff Act), any article which is imported into India shall, in addition, be liable to additional Customs duty (CVD) equal to Excise duty for the time being leviable on a like article if produced or manufactured in India. Accordingly, the Department demanded CVD from the Petitioner on the Impugned goods cleared to DTA from SEZ unit.
The Petitioner urged that since the local manufacturers are not liable to pay any Excise duty on manufacture of the Impugned goods by way of exemption notification issued under Section 5A of the Central Excise Act, 1944 (the Excise Act), no CVD can be collected from them. Hence, the Petitioner applied for refund of CVD already collected, and for exemption from payment of CVD on the clearances made, where CVD was not so collected.
However, the Department relying on Section 5A of the Excise Act dismissed the application made and held that SEZ units are specifically excluded from the purview of Section 5A of the Excise Act and hence the Petitioner is not entitled for the exemption.Being aggrieved, the Petitioner filed a petition before the Hon’ble High Court of Gujarat.
The Hon’ble High Court of Gujarat held that:
Hence, the Hon’ble High Court decided the matter in favour of the Petitioner and held that SEZ unit will have to liability to pay CVD, if the local manufacturer of like goods is exempt from payment of whole of the Excise duty.