2022 (2) TMI 246 - AT - Central Excise

Refund of unutilized Cenvat credit of Education Cess, Secondary and Higher Education Cess, lying unutilized (credit balance) as on 30th June 2017 - Lead and Zinc Concentrates which are dutiable - HELD THAT - The Division Bench of this Tribunal in the case of M/S BHARAT HEAVY ELECTRICALS LTD. (EXCISE TAXATION DIVISION) VERSUS COMMISSIONER CENTRAL GOODS SERVICE TAX, CENTRAL EXCISE CUSTOMS, BHOPAL (MADHYA PRADESH) 2019 (4) TMI 1896 - CESTAT NEW DELHI has held that the assesee is eligible for the cash refund of the cessess lying as cenvat credit balance as on 30/06/2017 in their accounts. The Adjudicating authority is directed to disburse the refund with applicable interest, as per Rules, within a period of 60 days from the date of service/receipt of this order - appeal allowed - decided in favor of assessee.

Summary

Issues Involved:
1. Entitlement to refund of unutilized Cenvat credit of education cess and secondary and higher education cess.
2. Applicability of the amended definition of “eligible duties and taxes” under Section 140 of the CGST Act.
3. Provisions for refund under Section 11B of the Central Excise Act and Section 142(3) of the CGST Act.
4. Time-barred nature of the refund claims.

Issue-wise Detailed Analysis:

1. Entitlement to Refund of Unutilized Cenvat Credit of Education Cess and Secondary and Higher Education Cess:

The appellant, a manufacturer of Lead and Zinc Concentrates, had unutilized Cenvat credit of education cess and secondary and higher education cess as of June 30, 2017. The appellant transitioned the eligible Cenvat credit to GST but did not transition the cess amounts due to the Guidance Note dated March 14, 2018, and the retrospective amendment to Section 140 of the CGST Act. Consequently, the appellant filed refund applications for the unutilized cess amounts under Section 142(3) of the CGST Act.

2. Applicability of the Amended Definition of “Eligible Duties and Taxes” under Section 140 of the CGST Act:

The Show Cause Notices (SCNs) issued to the appellant proposed rejecting the refund applications based on the retrospective amendment to Section 140, which excluded cess amounts from the definition of “eligible duties and taxes.” The SCNs argued that since cess amounts are not levied under GST, they are not meant to be transitioned and their credit balance should lapse as per the transitional provisions of the CGST Act.

3. Provisions for Refund under Section 11B of the Central Excise Act and Section 142(3) of the CGST Act:

The appellant argued that under Section 142(3) of the CGST Act, they are entitled to claim a refund of the unutilized Cenvat credit of cess amounts. Section 142(3) provides that every claim for refund of any amount of Cenvat credit, duty, tax, interest, or any other amount paid under the existing law shall be disposed of in accordance with the existing law, and any amount eventually accruing shall be paid in cash. The appellant contended that the credit earned was a vested right, supported by the Supreme Court ruling in Eicher Motors Ltd. v. Union of India, and that the refund claims were correctly filed under Section 142(3).

4. Time-barred Nature of the Refund Claims:

The SCNs also argued that the refund claims were time-barred as per Section 11B(1) of the Central Excise Act, which requires refund claims to be filed within one year from the relevant date. The appellant countered that Section 11B does not apply as the refunds arise due to transitional provisions under the CGST Act.

Judgment:

The Tribunal considered the appellant's arguments and the precedents cited, including the decision in Bharat Heavy Electricals Ltd. v. Commissioner, CGST, Central Excise & Customs, Bhopal, where it was held that the credits earned were a vested right and could not be extinguished by a change in law without a specific provision to that effect. The Tribunal noted that there was no provision in the newly enacted law that such credits would lapse and that the appellant was entitled to the refund of the unutilized cess amounts.

Conclusion:

The Tribunal allowed the appeals, set aside the impugned orders, and directed the adjudicating authority to disburse the refund with applicable interest within 60 days from the date of receipt of the order. The decision was pronounced on February 2, 2022.