2021 (6) TMI 711 - AT - Central Excise

Condonation of delay in filing refund claim - Refund of CENVAT Credit - export of granite slabs and tiles - non-reversal of the credit at the time of filing refund claims - procedural lapse or not - HELD THAT - The adjudicating authority allowed the refunds by holding that non-reversal of the credit at the time of filing refund claims is only a minor procedural lapse and reversal is ensured before sanctioning of the refund; hence the delay was condoned. The eligibility of the appellant to claim refund is not disputed and it is also not disputed that the appellant has debited the amount claimed in the GSTR3B. Also, the Tribunal has consistently held that credit reversed without being utilized considered as if credit has not been taken. Hence the credit reversed in GSTR-3B tantamounts to not been taken credit in clause 1 - when the adjudicating authority has held that the belated debit is only a procedural lapse and technical in nature but the learned Commissioner(Appeals) in the impugned order has not discussed this aspect nor has given any contrary findings. The appellant has reversed the credit in the GSTR-3B; but there was only a delay in debiting the same and this delay is procedural delay and will not disentitle the appellant from claiming the refund - Rejection of refunds is not sustainable - the impugned order rejecting the refunds is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Refund of cenvat credit under Cenvat Credit Rules, 2004 read with Notification No.27/2012-CE(NT) - Reversal of credit in GSTR3B - Departmental appeals against refund granted by original authority - Interpretation of procedural lapses in claiming refund.

Analysis:
The case involved an appeal against the order passed by the Commissioner of Central Tax (Appeals), Bangalore, which accepted three departmental appeals against the decision of the original authority granting refunds to the appellant. The appellant, engaged in the manufacture and export of granite slabs and tiles, filed three refund applications for cenvat credit under Rule 5 of CCR, 2004. The dispute arose when the Department proposed to reject the refund claims due to the appellant's alleged failure to debit the amount in the cenvat register as required by the notification. The original authority sanctioned the refund, but the Department appealed against this decision.

Upon hearing both sides and examining the documents, the Tribunal found that the issue at hand was narrow. The Department contended that the credit reversal in GSTR3B pertained to GST credit and not cenvat credit, disallowing the refunds under Section 142(3) and Section 142(4). However, it was established that the appellant had debited the amount claimed in the GSTR3B, meeting the conditions for refund. The Tribunal referred to precedents, including the case of JCT Limited Vs. CCE, which held that reversed credit without utilization equated to credit not being taken, making the appellant eligible for exemption benefits under the notification.

The Tribunal noted that the delay in debiting the credit was procedural and did not disqualify the appellant from claiming the refund. Relying on the decision in the case of Sandoz Pvt. Ltd., the Tribunal concluded that the delay in debiting the cenvat account did not invalidate the refund claim. The Tribunal set aside the impugned order disallowing the refunds, allowing the appeal of the appellant with consequential relief. The judgment emphasized that the delay was a procedural lapse and did not affect the eligibility of the appellant for the refund.

In conclusion, the Tribunal's decision favored the appellant, emphasizing that the delay in debiting the credit was procedural and did not warrant disallowing the refunds. The judgment highlighted the importance of meeting the conditions for refund eligibility and clarified that minor procedural lapses should not hinder legitimate refund claims under the relevant rules and notifications.