Decided on February 05,2015

Zydus Technologies Ltd. Appellant
Commissioner Of S.T. Respondents


P.K.DAS, J. - (1.)A common issue is involved in these appeals and therefore, all are taken up for disposal. The relevant facts of the case, in brief, are that the appellants are engaged in the manufacture of Pharmaceutical products in Pharmaceutical Special Economic Zone, under the Special Economic Zone Act, 2005 read with Special Economic Zone Rules, 2006. The appellants, during the period of setting up of the plant, before starting the commercial production, received various services and paid the service tax. The appellant obtained a letter of approval from the Development Commissioner for setting up of the plant for manufacturing of the Medicaments. Notification No. , dated 31 -3 -2004, provides exemption from payment of service tax of any taxable service procured by a unit or a developer situated in a Special Economic Zone. The said notification was superseded by Notification No. , dated 3 -2 -2009, directing that any taxable service procured by a unit or a developer in SEZ would liable to pay the service tax at appropriate rate and file a refund claim after following the procedure laid down therein. Notification No. was amended by Notification No. , dated 28 -5 -2009 provided unconditional exemption to services within SEZ without filing refund claims. The present appeals relate to the refund claims filed under Notification. No. 9/2009 -S.T. (supra) which were rejected by the lower authorities on various grounds. The Commissioner (Appeals) upheld the adjudication orders except in Appeal No. E/12939/2013 and E/13621/2013, where the appeal was partly allowed/rejected and partly remanded. Hence, the appellants filed these appeals before the Tribunal.
(2.)The ld. Advocate for the appellants submits that the main issue involved in these appeals is that the appellant paid the service tax before the commercial production and therefore, they are not eligible to claim the refund under the Notification No. (supra). He submits that this issue is squarely covered in their favour in their own case [Zydus Tech. Ltd. v. CST, Ahmedabad - : 2013 (30) S.T.R. 616 (Tri. -Ahmd.)] which was upheld by Hon'ble Gujarat High Court in the case of CST v. Zydus Technologies Ltd. - : 2014 (35) S.T.R. 515 (Guj.). He further submits that in some cases, they have paid the service tax, but the refund was denied on the ground that the services were wholly rendered within the SEZ and therefore, the payment of service tax was not required. He submits that this issue is also covered in their favour in the case of Intas Pharma Ltd. v. CST, Ahmedabad - : 2013 (32) S.T.R. 543 (Tri. -Ahmd.) and Tata Consultancy Services Ltd. v. CCE (LTU) Mumbai - : 2013 (29) S.T.R. 393 (Tri.). He further submits that the refund was also denied on the ground that the appellant failed to produce the proof that the service was consumed by them. In this context, it is submitted that the service provider raised the bills in the appellant's name and it is clearly evident that they have consumed the service in SEZ. It is further submitted that there is no contrary evidence placed by the Revenue that it was not consumed by them. It is also submitted that the service is intangible nature and therefore, there is no presumption that the service was not used in SEZ. It is submitted that whatever the services were used in the SEZ, it would be eligible for refund as per the SEZ Act and Rules as observed by the Tribunal in the case of Intas Pharma Ltd. (supra) and it has a over -riding effect to the Act by the Notification.
(3.)ON the other hand, the ld. Authorised Representative for the Revenue drew our attention of the Bench to the relevant portion of the Notification No. . He submits that Clause (a) and (b) to the proviso of the said notification provides that the service should be used in the authorized operation in SEZ. He submits that Clause (a) of proviso to Para 2 of the said notification provides that the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, after sufficient satisfaction that the said services have been actually used in relation to authorized operation in SEZ, refund of service tax paid in SEZ service used in relation to the authorized operation in the SEZ, would be allowed. In the present appeals, the appellants failed to demonstrate as to how the certain services were used in SEZ. He submits that in some cases, the refund was filed beyond the stipulated period. He further submits that the appellant claimed the benefit of exemption notification and the onus lies with the assessee to establish that the service used in SEZ. It is also contended that Sections 26 and 31 of SEZ Act provides exemption subject to the services used for the authorized operation. The refund in respect of certain services beyond the list of the Development Commissioner are in clear violation of the condition of SEZ Act.

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