2024 (6) TMI 245 - AT - Central Excise

CENVAT credit on CVD and SAD components under CENVAT Credit Rules, 2004 - Applicability of Section 142(3) of the CGST Act, 2017 for refund claims - applicability of Doctrine of Necessity. CENVAT credit on CVD and SAD components under CENVAT Credit Rules, 2004 - HELD THAT - It is an undisputed position that the fact of filing of ER-1 or TRAN-1 could not have been availed of as ER-1 was required to be filed up to 30.06.2017 and TRAN-1 up to 27.12.2017, by which time the appellant had not even paid the CVD/SAD for which the case for claim of refund. It is, therefore, evident that the said provision could not have been applied too in the present case of the appellant. The applicability of the Hon ble Jharkhand High Court s decision as laid out in the case of M/S RUNGTA MINES LIMITED VERSUS THE COMMISSIONER OF CENTRAL GOODS SERVICE S TAX AND CENTRAL EXCISE, THE COMMISSIONER (APPEALS) , CENTRAL GOODS SERVICES TAX AND CENTRAL EXCISE, 2, THE ASST. COMMISSIONER, CENTRAL GOODS SERVICES TAX AND CENTRAL EXCISE, DIVISION I, JHARKHAND 2022 (2) TMI 934 - JHARKHAND HIGH COURT has thus been contested by the appellant pointing out that the said case related to the claim of credit on invoices pertaining to a period prior to 30.06.2017, for receipt of services and transfer of credit against such invoices as ITC in GST to TRAN-1 return. Whereas in the present appeal filed by the appellant for refund CVD and SAD as no CENVAT credit could be availed, and as already stated above were made well beyond the said cut of date for filing of ER-1 and TRAN-1 returns. Applicability of section 142(3) of GST Act, 2017 - HELD THAT - The question of refund in cash of CVD/SAD paid, on account of in admissibility of CENVAT credit, is now no more res-integra and cash refund of such duties paid utilising the provisions of section 142 have been liberally approved of by various judicial/ quasi-judicial authorities. The Principal Bench of the CESTAT in the case of M/S MITHILA DRUGS PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS AND SERVICE TAX, UDAIPUR (RAJASTHAN) 2022 (3) TMI 58 - CESTAT NEW DELHI had observed ' I further find that refund of CVD and SAD in question is allowable, as credit is no longer available under the GST regime, which was however available under the erstwhile regime of Central Excise prior to 30.06.2017. Accordingly, I hold that the appellant is entitled to refund under the provisions of Section 142(3) and (6) of the CGST Act.' Doctrine of necessity - HELD THAT - The fact that payment of CVD and SAD subsequently during the GST regime in respect of EPCG authorisation issued in respect of imports made prior to 30.06.2017, by way of regularisation for non-fulfilment of export obligation, the authorities below have erred in rejecting the refund claim of the appellant. The cash refund of CVD and SAD in question is unhindered and rightly merited, as credit is no longer available to them under the GST regime. Moreover, the same is further driven by the Doctrine of Necessity in the given circumstances, as the credit of such duty paid is not admissible to the appellant. No credit is available under the provisions of the law, it is held that the appellant is entitled to refund in terms of the provisions of section 142 (3) and (6) of GST Act - the impugned order is set aside - appeal allowed.

Summary

Issues Involved:
1. Entitlement to avail CENVAT credit on CVD and SAD components paid on imported goods.
2. Applicability of Section 142(3) of the CGST Act, 2017 for refund claims.
3. Rejection of refund claims by lower authorities and Commissioner (Appeals).
4. Doctrine of Necessity in the context of refund claims.

Summary:

1. Entitlement to avail CENVAT credit on CVD and SAD components paid on imported goods:
The appellant, M/s Hindustan Equipments Private Limited, contended that they are entitled to avail CENVAT credit on the CVD and SAD components paid on imported goods under the CENVAT Credit Rules, 2004 (CCR), as these goods were used for the manufacture of dutiable taxable goods. The Revenue did not dispute the utilization of these goods as claimed by the appellant.

2. Applicability of Section 142(3) of the CGST Act, 2017 for refund claims:
The appellant argued that due to the introduction of the GST regime from 01.07.2017, they were unable to avail the credit of CVD and SAD paid towards the non-fulfillment of export obligation amounting to Rs. 49,90,979/-. They sought recourse to Section 142(3) of the CGST Act, 2017, which allows for the refund of any amount of CENVAT credit, duty, tax, or interest paid under the existing law to be disposed of in accordance with the provisions of the existing law and paid in cash.

3. Rejection of refund claims by lower authorities and Commissioner (Appeals):
The refund claims filed by the appellant were rejected by the lower authorities and the Commissioner (Appeals) on the grounds that the claims were not sustainable under the existing law and that the appellant did not avail the CENVAT credit or ITC within the stipulated time frame. The Commissioner (Appeals) also held that the provisions of Section 142(3) of the CGST Act were not applicable to the appellant's case.

4. Doctrine of Necessity in the context of refund claims:
The Tribunal referred to the Doctrine of Necessity as discussed by the Hon'ble Madras High Court in a similar context of refund, stating that the transitional provisions under Section 142 of the CGST Act were brought in to address such situations. The Tribunal also cited various judicial precedents where cash refunds of CVD and SAD were allowed under Section 142(3) and (6) of the CGST Act, 2017, due to the inaccessibility of CENVAT credit under the GST regime.

Conclusion:
The Tribunal held that the authorities below erred in rejecting the refund claim of the appellant. The appellant is entitled to a cash refund of CVD and SAD paid, as credit is no longer available under the GST regime. The Tribunal allowed the appeal with consequential relief as per law, setting aside the order of the lower authority.

[Order pronounced on 06 / 06 / 2024]