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2024 (3) TMI 1435 - AT - Central ExciseRefund of payment of Countervailing Duty (CVD) and Special Additional Duty (SAD) made after the commencement of the GST regime - non-fulfilment of Export obligation - time limitation - HELD THAT - Refund claim is filed on 12/2/2019. Since they have made the payment on 21/06/2018 the time limit for filing the refund claim has to be calculated from this date and not from the date of Bill of Entry as has been erroneously taken by the Adjudicating Authority. Therefore the Appellant has filed the refund claim within the time limit of one year. So far as the stand taken by the Adjudicating Authority that the Pay Order is not a proper document for taking the credit it is to be noted that the Appellant has not availed the Cenvat Credit since it is not possible for him to do so. He is only making a claim that in the normal course he will be eligible to take the credit. Even under Rule 9 of the Cenvat Credit Rules 2004 any challan evidencing the payment of duty will be eligible to as document for taking the Cenvat Credit. The Pay Order along with the Working Sheet showing the details of Basic Customs Duty CVD SAD and interest has to be viewed as a proper document for availing Cenvat Credit. Therefore there are no merit in the stand taken by the Adjudicating Authority. Whether the Appellant is eligible to take cash refund for the payment of CVD and SAD done by them during the present GST regime? - HELD THAT - This issue is no more res intigra. The Larger Bench in the case of 2023 (12) TMI 1145 - CESTAT CHENNAI-LB has held even if the service tax had been deposited by the appellant after 01.01.2017 nonetheless the refund of any amount of the CENVAT credit could be claimed only under subsection (3) of section 142 of the CGST Act and against this order an appeal will lie to the Tribunal. Conclusion - The refund of the CVD and SAD amounts paid by the Appellant allowed along with applicable interest thereby affirming the entitlement to cash refund under the CGST Act for duties paid under the erstwhile law post-GST implementation. Appeal allowed.
The core legal questions considered in this judgment include: (1) Whether the refund claim filed for the payment of Countervailing Duty (CVD) and Special Additional Duty (SAD) made after the commencement of the GST regime is maintainable; (2) Whether the Pay Order dated 21/06/2018 qualifies as a valid duty-paying document for the purpose of claiming Cenvat Credit or refund; (3) Whether the refund claim filed beyond one year from the date of the Bill of Entry is time-barred; and (4) Whether cash refund under Section 142(3) and Section 142(6)(a) of the CGST Act, 2017 is permissible for duties paid under the erstwhile laws post-GST implementation.
Regarding the timeliness of the refund claim, the Tribunal analyzed the relevant provisions of the CGST Act, 2017, particularly Section 142(3), which mandates that refund claims relating to Cenvat credit or duties paid under the existing law before, on, or after the appointed day (GST implementation date) must be disposed of in accordance with the provisions of the existing law. The Appellant had paid the Customs Duty (Basic Customs Duty, CVD, and SAD) on 21/06/2018 due to non-fulfillment of export obligations under the Advance Authorization Scheme, and filed the refund claim on 12/02/2019. The Adjudicating Authority had erroneously calculated the limitation period from the date of the Bill of Entry (January-February 2017), rejecting the refund claim as time-barred. The Tribunal held that the limitation period must be computed from the date of actual payment of duty (21/06/2018), thus the refund claim was within the prescribed time limit of one year. On the validity of the Pay Order as a duty-paying document, the Tribunal referred to Rule 9 of the Cenvat Credit Rules, 2004, which allows any challan evidencing payment of duty to be treated as valid for claiming credit. Although the Appellant did not avail Cenvat Credit due to the GST regime's onset, the Pay Order accompanied by a detailed Working Sheet specifying Basic Customs Duty, CVD, SAD, and interest was deemed a proper document for the purpose of refund claim. The Tribunal rejected the Adjudicating Authority's contention that the Pay Order was invalid for claiming credit or refund. The pivotal issue was whether cash refund is permissible for CVD and SAD paid after GST implementation, given that Cenvat Credit Rules, 2004 ceased to operate post-GST. The Tribunal extensively analyzed Section 142(3) and Section 142(6)(a) of the CGST Act, 2017, which provide for disposal of claims relating to Cenvat credit under the existing law and entitlement to cash refund where credit cannot be carried forward under GST. The Tribunal relied heavily on the Larger Bench decision in Bosch Electrical Drive India Pvt. Ltd., which held that refund claims under Section 142(3) can be granted even if the duty was paid post-GST commencement, and that cash refund is available for Cenvat credit amounts not carried forward. Further, the Tribunal considered subsequent authoritative pronouncements, including the Hyderabad Bench decision in Aurobindopharma Limited, which affirmed that amounts of CVD and SAD paid post-GST are eligible for cash refund under Section 142(3) and 142(6)(a). The Tribunal also cited decisions from other benches, such as Mithila Drugs Pvt Ltd and Clariant Chemicals India Ltd, which consistently held that refund of CVD and SAD is allowable as credit is unavailable under GST, and that the relevant provisions explicitly contemplate cash refund to avoid unjust enrichment. The Tribunal addressed the Respondent's argument that the Bosch Larger Bench decision pertains only to Service Tax and Central Excise and not to Customs duties like CVD and SAD. It clarified that since Cenvat Credit Rules, 2004 govern credit for CVD and SAD, the Larger Bench ruling applies equally to these duties. The Tribunal observed that the principles applicable to CVD and SAD are equally applicable to IGST, given the similar eligibility for credit under the law. In support of its conclusion, the Tribunal referred to a recent Division Bench decision of the Hyderabad Tribunal in Granules India Ltd., which held that refund claims for CVD and SAD paid during the GST regime for imports under the Advance Authorization Scheme prior to 30.06.2017 are maintainable. The Division Bench emphasized that Section 142(3) read with Sections 142(5) and 142(8A) entitles the assessee to refund of such amounts, and that the limitation period runs from the date of payment, not the Bill of Entry. The Division Bench also distinguished the Jharkhand High Court ruling in Rungta Mines Ltd., finding it inapplicable on facts. In applying these legal principles to the facts, the Tribunal found that the Appellant voluntarily paid the Customs Duty including CVD and SAD on 21/06/2018 after failing to fulfill export obligations. Since the Appellant was entitled to Cenvat Credit under the erstwhile regime but could not avail it post-GST, the refund claim filed on 12/02/2019 was timely and valid. The Pay Order was a valid document evidencing duty payment. The Tribunal found no legal bar to granting cash refund under Section 142(3) and 142(6)(a) of the CGST Act for the amounts of CVD and SAD paid. The Tribunal rejected the lower authorities' findings on limitation and invalidity of the Pay Order and held that the Appellant is entitled to refund with interest as per Section 11BB of the Central Excise Act. The Tribunal also considered and dismissed the Respondent's competing arguments, including the claim that no provision exists for cash refund under Sections 142(3) and 142(6)(a), and that the Pay Order was not a valid duty-paying document. It found these contentions contrary to the settled legal position established by the Larger Bench and subsequent decisions. The Tribunal emphasized that the legislative intent behind Section 142 provisions is to ensure that credit amounts under the existing law, which cannot be carried forward under GST, are refunded in cash to prevent unjust enrichment. In conclusion, the Tribunal held:
Significant holdings include the Tribunal's reliance on the Larger Bench decision in Bosch Electrical Drive India Pvt. Ltd., which clarified that "refund of any amount of the CENVAT credit could be claimed only under subsection (3) of section 142 of the CGST Act," and that such claims must be disposed of in accordance with existing law. The Tribunal quoted: "every claim for refund by any person before, on or after the appointed day, 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 provisions of the existing law and any amount eventually accruing to him, shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provision of subsection (2) of section 11B of the Central Excise Act (unjust enrichment)." The Tribunal also established the principle that the limitation period for refund claims runs from the date of payment of duty, not the date of the Bill of Entry, and that Pay Orders evidencing payment are valid documents for claiming refund. It reinforced that the transition to GST does not extinguish the right to refund Cenvat Credit amounts that cannot be carried forward, thus protecting the assessee from loss due to procedural changes. Ultimately, the Tribunal allowed the appeal with consequential relief, directing the refund of the CVD and SAD amounts paid by the Appellant along with applicable interest, thereby affirming the entitlement to cash refund under the CGST Act for duties paid under the erstwhile law post-GST implementation.
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