2024 (7) TMI 541 - AT - Central Excise

Refund of CENVAT credit in cash on the amount of CVD and SAD paid under the existing law under the provisions of section 142(3) of the CGST Act - HELD THAT - Shakti Pumps is entitled to cash refund of CENVAT credit on the amount of CVD and SAD paid even after 01.07.2017. The Commissioner (Appeals), therefore, committed no illegality in granting this relief to Shakti Pumps. In GRANULES INDIA LTD VERSUS COMMISSIONER OF CENTRAL TAX HYDERABAD 2024 (2) TMI 1375 - CESTAT HYDERABAD , the Division Bench after placing reliance upon the Larger Bench decision of the Tribunal in M/S. BOSCH ELECTRICAL DRIVE INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL TAX, CHENNAI 2023 (12) TMI 1145 - CESTAT CHENNAI-LB held 'Section 142(3) read with 142(5) of the GST act, provides that 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 sub-section (2) of section 11B of the Central Excise Act (unjust enrichment).' The present appeal that has been filed by the department to assail the order passed by the Commissioner (Appeals) would, therefore, have to be dismissed and is dismissed.

Issues Involved:
1. Entitlement to refund of CENVAT credit in cash for Countervailing Duty (CVD) and Special Additional Duty (SAD) paid under the existing law post-CGST implementation.
2. Applicability of Section 142(3) of the CGST Act for refund claims.
3. Compliance with the provisions of the 2004 Credit Rules.
4. Examination of unjust enrichment.
5. Interpretation of transitional provisions under the CGST Act.
6. Relevance of previous judicial decisions on similar issues.

Detailed Analysis:

1. Entitlement to Refund of CENVAT Credit in Cash:
The primary issue was whether Shakti Pumps was entitled to claim a refund of CENVAT credit in cash for the CVD and SAD paid under the existing law, as per Section 142(3) of the CGST Act. The Commissioner (Appeals) held that Shakti Pumps was entitled to such a refund, subject to verification of unjust enrichment. This was based on the fact that Shakti Pumps had paid the appropriate CVD and SAD due to non-fulfillment of export obligations within the specified period under the Advance Authorization (AA) Scheme.

2. Applicability of Section 142(3) of the CGST Act:
Section 142(3) of the CGST Act stipulates that any claim for refund of CENVAT credit filed before, on, or after the appointed day should be disposed of according to the provisions of the existing law, and any amount eventually accruing to the claimant should be paid in cash. The Tribunal confirmed that Shakti Pumps' refund claim fell under this provision, as the duties were paid under the existing law, which includes the Central Excise Act and the Finance Act.

3. Compliance with the Provisions of the 2004 Credit Rules:
The department argued that Shakti Pumps had not complied with the provisions of the 2004 Credit Rules and hence was not eligible for CENVAT credit and its refund. However, the Tribunal noted that Shakti Pumps was entitled to claim CENVAT credit under the 2004 Credit Rules before 01.07.2017 and that there was no necessity for a specific clause in the notification to allow CENVAT credit for duties paid due to non-fulfillment of conditions.

4. Examination of Unjust Enrichment:
The Commissioner (Appeals) and the sanctioning officer verified the condition of unjust enrichment before sanctioning the refund. The Tribunal upheld this verification process, noting that the refund was granted only after ensuring that Shakti Pumps had not passed on the burden of the duty to any other person.

5. Interpretation of Transitional Provisions under the CGST Act:
The Tribunal referred to various sections (142(3), 142(6)(a), and 142(8)(b)) of the CGST Act to interpret the transitional provisions. It concluded that these provisions allowed for the refund of CENVAT credit in cash even if the duties were paid after the implementation of the CGST Act, provided the claims were disposed of according to the existing law.

6. Relevance of Previous Judicial Decisions:
The Tribunal relied on several previous decisions, including those of the Larger Bench in Bosch Electrical and other Division Bench decisions, which supported the view that refunds of CENVAT credit for CVD and SAD paid post-01.07.2017 were permissible under Section 142(3) of the CGST Act. The Tribunal dismissed contrary decisions, such as those in Servo Packaging Ltd. and CAD Vision Engineers Pvt. Ltd., noting that they did not align with the Larger Bench's ruling.

Conclusion:
The Tribunal dismissed the department's appeal, affirming that Shakti Pumps was entitled to a cash refund of CENVAT credit for CVD and SAD paid after the implementation of the CGST Act. The decision emphasized the importance of adhering to the transitional provisions of the CGST Act and upheld the findings of the Commissioner (Appeals) regarding the eligibility and verification of unjust enrichment.

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