2024 (5) TMI 65 - AT - Central Excise

Entitlement for refund of input credit in cash, which was neither transitioned in accordance with TRAN-1 (GST) procedure into the new regime nor got reflected in the ER-1 or revised ER-1 return post 01.07.2017 - whether the said refund could have been granted in accordance with the provisions of existing law or otherwise, except to the extent that the refund, if eligible, will still be admissible irrespective of any provisions contrary to this provision contained under the provisions of existing law, other than unjust enrichment? HELD THAT - The perusal of CCR, 2004 under the existing law clearly brings out that the refund of unutilized Cenvat credit can be made only for specific purpose covered under Rule 5, 5A and 5B, subject to certain prescribed/notified procedure, conditions and limitations etc., as may be specified or notified by notification in this regard. They have also admittedly not filed any revised ST-3 within the specified tax limit as would have been otherwise required under Section 142(9)(b). Reliance placed by Revenue on the judgment of Hon ble High Court of Jharkhand in the case of Rungta Mines vs CCE, Jamshedpur 2022 (2) TMI 934 - JHARKHAND HIGH COURT is quite relevant to appreciate the scope of Section 142(3) of the Act. In this case, it was held that the provision of Section 142(3) does not entitle a person to seek refund where no such right occurs under the existing law or under new CGST regime in terms of provision of CGST Act and the rules framed and notification issued thereunder. Meaning thereby, Section 142(3) does not confer a new right, which never existed under the old regime to the manner of giving relief, if the person is not entitled under the existing law - The ratio of the aforesaid judgment is squarely applicable to the facts of the case, in so far as the interpretation of Section 142(3) of the Act is concerned. It must also be noted that a plain reading of this provision under the Act clearly supports this interpretation. Relying on the judgment of Hon ble High Court of Jharkhand in the case of Rungta Mines, it is found that when there was no provision for grant of refund in cash in respect of tax paid/credit taken in respect of such input in the existing law, i.e., the Central Excise Act and Cenvat Credit Rules, 2004, then the refund cannot be granted in cash in respect of such unclaimed/unutilized credit on input. The options available for getting cash refund are clearly covered within the different provisions under the Act viz., Section 140, 142(3) 142(9)(b) - In the instant case, admittedly, neither Section 140 was followed nor Section 142(9)(b) was availed. Therefore, the cash refund, by virtue of Section 142(3) would not be admissible in the facts of the case. There are no infirmity in the Order passed by the Commissioner (Appeals), upholding the rejection of refund in cash, amounting to Rs.14,40,627/- by the Original Authority - appeal dismissed.

Summary

Issues Involved:
1. Rejection of refund claim of Rs.14,40,627/-.
2. Eligibility for cash refund under Section 142(3) and Section 142(9)(b) of the CGST Act, 2017.
3. Applicability of time bar and unjust enrichment under Section 11B of the Central Excise Act, 1944.
4. Procedural lapses and vested rights concerning Cenvat credit.

Summary:

Issue 1: Rejection of Refund Claim of Rs.14,40,627/-
The appellants, engaged in manufacturing pharmaceutical products, sought a refund of Rs.14,40,627/- as part of their transition from Central Excise to GST. The department rejected this claim primarily because no revised ER-1 return was filed, as required u/s 142(9)(b) of the CGST Act, 2017. The Commissioner (Appeals) upheld this rejection, stating there was no provision under the existing law for such a refund.

Issue 2: Eligibility for Cash Refund under Section 142(3) and Section 142(9)(b)
The Original Authority denied the refund under Section 142(3) of the Act, noting the absence of relevant provisions under the Central Excise Act or Rules for such refunds. The Commissioner (Appeals) agreed, emphasizing that the appellants had not utilized the provisions under Section 140 for carrying forward the credit or availed Section 142(9)(b). The Tribunal confirmed that Section 142(3) does not independently grant eligibility for refunds without reference to the existing law.

Issue 3: Applicability of Time Bar and Unjust Enrichment
The department argued that the refund claim was time-barred and failed to meet the unjust enrichment criteria u/s 11B(2) of the Central Excise Act. The Commissioner (Appeals) found that the time limit under Section 11B(1) did not apply to refunds claimed under Section 142(3) and 142(9)(b). However, the Tribunal upheld the rejection, noting the absence of any explicit provision for cash refunds under the existing law.

Issue 4: Procedural Lapses and Vested Rights
The appellants argued that procedural lapses should not deny them their vested right to Cenvat credit, citing various judgments. The Tribunal, however, distinguished these cases, emphasizing the need for strict compliance with statutory provisions. The Tribunal noted that Section 142(3) does not create new rights but preserves existing rights under the old law, which must be strictly interpreted.

Conclusion:
The Tribunal dismissed the appeal, upholding the rejection of the refund claim of Rs.14,40,627/-, confirming that the appellants were not entitled to a cash refund under the provisions of Section 142(3) of the CGST Act, 2017.