2023 (3) TMI 736 - HC - Central Excise

Refund of CENVAT credit post GST era - corresponding debit to the CENVAT credit account - impossibility compliance with the conditions of Notification No.27/2012 - Export of goods - Excluding the period spent to pursue the claim at wrong forum - Section 142(3) of GST Act, 2017 - HELD THAT - This order is patently erroneous on several grounds. Firstly, the eligibility of the petitioner to refund on a substantive basis has itself, never been questioned. The denial is based solely on a technical basis - That apart, the fact that Notification No.27/12 has been held to propound an incorrect condition by this Court as well as by the CESTAT ought to have merited consideration with the authority. Instead he does not advert to this aspect of the matter at all. The impugned order is wholly incorrect in law and is liable to be set aside - Petition allowed.

Summary

Issues:
The judgment involves the denial of CENVAT credit refund under the Goods and Services Tax (GST) regime, based on a technicality related to Notification No.27/2012, and subsequent legal proceedings challenging the denial.

Issue 1: Denial of CENVAT Credit Refund
The petitioner sought refund of CENVAT credit for the months of April, May, and June 2017 under Rule 5. The Central Board of Excise and Customs (Board) required a corresponding debit to the CENVAT credit account at the time of making the claim, as per Notification No.27/2012. However, with the introduction of GST, the CENVAT credit account was disabled, rendering compliance with the notification impossible. Other similarly placed assesses approached the Courts and authorities, highlighting the impracticality of compliance. The Court acknowledged the error in insisting on compliance with the notification, recognizing the disabled CENVAT account post-GST implementation.

Issue 2: Rejection of Refund Application
Subsequently, the petitioner filed a refund application under Section 54 of the Act, which was rejected based on the provisions of Section 54, the second proviso to Section 142(4), and a circular issued by the Board. The circular outlined conditions for refunds, which the petitioner did not meet. However, the Court noted that the error originated from the incorrect notification by the Board, making the circular's conditions irrelevant in this context. The petitioner made representations citing previous legal decisions and challenging the rejection, which was dismissed on the grounds of finality of the previous appellate authority's decision.

Conclusion
The Court set aside the impugned order, ruling in favor of the petitioner. The denial of the refund was deemed incorrect in law, and the petitioner was granted the refund of the CENVAT credit in cash within six weeks. The judgment emphasized that orders should stand or fail based on their own merits, without incorporating additional arguments not presented in the original decision.