2019 (2) TMI 1744 - HC - Central Excise

Rebate claim/refund in cash instead of crediting the same in CENVAT Account - Rule 18 of the Central Excise Rules, 2002 - the revisional authority rejected the petitioner's case for rebate on the exported goods, however, on the ground that the Government cannot retain an amount which is not due to it - Sub-Section(3) of Section 142 of the Central Goods and Services Tax Act, 2017 - HELD THAT - The duty, which was paid by the petitioner, which was otherwise not payable on the exported goods and therefore, rebate of such duty was not admissible in terms of Rule 18 of the Central Excise Rules. However, the duty, which was paid by the petitioner is held to be treated as voluntary deposit - As per Section 142(3) of the GST Act, every claim for the refund filed by any person before, on or after the appointed day i.e. 01.07.2017 for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law, should be disposed of in accordance with the provisions of existing law and any amount eventually accruing to such person should be paid in cash. In case of M/s. Lanxess India Pvt. Ltd. 2014 (12) TMI 571 - MADRAS HIGH COURT , the Commissioner (Appeals) has directed the sanctioning Authority to refund in cash. As per the GST transition provisions, the balance of credit lying un-utilized in account as on 30.06.2017 only gets carried forward - Hence, in the present case also, what was lying in CENVAT account of the petitioner before 10.07.2017 was to be carried forward in fresh account of CENVAT account after appointed day i.e. 01.07.2017. The respondent No.2 ought to have directed the sanctioning Authority to refund the duty of the amount in cash instead of credit in the CENVAT account - impugned order passed by the respondent is partly modified to the extent that instead of crediting the duty in the CENVAT account of the petitioner, the sanctioning Authority is directed to refund the amount in cash to the petitioner - Petition allowed in part.

Summary

Issues:
Challenge to rejection of rebate claim under Central Excise Rules, 2002 and subsequent appeal process. Interpretation of Section 142(3) of the Central Goods and Services Tax Act, 2017 regarding refund of CENVAT credit in cash post-GST regime.

Analysis:

1. The petitioner, a company engaged in manufacturing capital goods, filed a rebate claim under Rule 18 of the Central Excise Rules, 2002, after physically exporting boilers on payment of excise duty. The rebate claim was rejected by respondent No.3, leading to subsequent appeals before the Commissioner of Central Excise (Appeals) and the Revisionary Authority, respondent No.2, who also rejected the claim.

2. The High Court analyzed the revision order dated 27.12.2017, where the revisional authority held that the duty paid by the petitioner on exported goods was not required to be paid and, therefore, the rebate claim was not admissible. However, the authority directed the duty amount to be recredited in the petitioner's CENVAT Credit Account. The petitioner argued for a cash refund post-GST regime based on Section 142(3) of the GST Act.

3. The Court referred to a similar case involving M/s. Lanxess India Pvt. Ltd., where the Commissioner (Appeals) directed a cash refund instead of crediting the amount in the CENVAT account. The Court emphasized that under Section 142(3) of the GST Act, any refund of CENVAT credit should be paid in cash, especially for claims filed after 01.07.2017.

4. The respondent No.2, in the impugned order, considered the duty paid by the petitioner as a voluntary deposit and allowed recredit in the CENVAT account. However, the Court held that the duty amount, not payable on the exported goods, should be refunded in cash as per the clear provision of Section 142(3) of the GST Act, especially considering the transition provisions post-GST implementation.

5. Consequently, the High Court allowed the petition, modifying the impugned order to direct the sanctioning Authority to refund the duty amount in cash to the petitioner instead of crediting it in the CENVAT account. The Court's decision was based on the interpretation of the relevant legal provisions and the specific circumstances of the case, ensuring compliance with the post-GST refund mechanisms.