2024 (9) TMI 507 - AT - Central Excise

Eligibility for refund of CVD and SAD in cash in terms of Section 11B of the Central Excise Act, 1944 read with Section 142(3) and 142(6)(A) of the Central Goods and Service Tax Act, 2017 - case of appellant is that since they paid the duty only after introduction of GST and they were otherwise eligible to take credit of CVD and SAD, they were entitled for refund. Whether the appellant can claim the refund in cash in respect of CVD and SAD paid in GST era after being non-eligible for relaxation for making export obligation, relying on the provisions under Section 142 or otherwise? HELD THAT - A plain reading of Section 142 would indicate that it primarily provides that in only such situations where the refunds are otherwise admissible under the existing law and it is not possible to refund the same in credit, the said amount will have to be refunded in cash. The Original Authority has examined the eligibility of the refund under the existing law and held that there was no provision for refund of said duty in cash under the existing law in the event of failure of export obligation, for which admittedly he has discharged the said duty. The Hon ble High Court of Jharkhand in the Rungta Mines Ltd. case, 2022 (2) TMI 934 - JHARKHAND HIGH COURT , has held that the claim for refund has to be examined within the provisions of the existing law i.e. in this case Central Excise Act and Rules made there under. There are only limited provisions for the cash refund in the existing law in respect of refund of credit taken by the assessee i.e. Rule 5, 5A and 5B of Cenvat Credit Rules 2004, and admittedly the case of the appellants are not falling within these rules, therefore, in the event they were not entitled for refund of credit in cash in respect of CVD and SAD under the existing law, then the provisions of Section 142 would not make them otherwise entitled for the said refund in cash. Further, in the facts of the case, it is to be clearly understood that they are not seeking refund of CVD and SAD paid due to non compliance of condition for grant of Advance Licence/Advance Authorisation, as they have rightly paid the duty being not eligible for exemption. They are in fact seeking refund in cash of the credit of duty paid towards CVD and SAD, which would have occurred to them as credit under the existing law. Denial of refund under Section 142(6) of the Act - HELD THAT - It is obvious that in facts of the case, it would not fall within the provisions of Section 142(6) as there was never a dispute or assessment relating to entitlement of credit, per se, before or after 01.07.2017. This provision covers a situation where there is any refund or admissibility of credit is in dispute and pending before any Judicial or Appellate Forum, who finally decides in favour of appellant post 2017 and as a consequence the person is entitled to said credit or refund. Since, post 01.07.2017, there is no provision to take said consequential credit, Section 142(6) covers grant of refund in cash under such situations. The refund in cash under Section 142(3) would be admissible only if the said refund is otherwise admissible for refund in cash under the existing law, which is not the case in the present appeal - there are no infirmity in the Order of the Commissioner (Appeals) - appeal dismissed.

Summary

Issues Involved:
1. Eligibility for refund of CVD and SAD under Section 11B of the Central Excise Act, 1944 read with Section 142(3) and 142(6)(A) of the Central Goods and Service Tax Act, 2017.
2. Entitlement to cash refund under GST regime.
3. Consideration of input credit as a vested right.
4. Applicability of Section 142(6) for refund claims.

Issue-wise Detailed Analysis:

1. Eligibility for refund of CVD and SAD:
The appellant, M/s NACL Industries Ltd., appealed against the rejection of their refund claim for CVD and SAD amounting to Rs. 49,40,903/-. The Original Authority and Commissioner (Appeals) both held that the appellant was ineligible for refund under Section 11B of the Central Excise Act, 1944 read with Section 142(3) and 142(6)(A) of the Central Goods and Service Tax Act, 2017. The rejection was based on the fact that the appellant failed to meet export obligations and did not fulfill the conditions for taking credit under the existing law.

2. Entitlement to cash refund under GST regime:
The appellant argued that since they paid the duty post-GST implementation, they were entitled to a cash refund in terms of Rule 142(3). However, the Tribunal noted that Section 142 primarily provides for cash refunds only when refunds are admissible under the existing law and cannot be refunded as credit. The Tribunal referenced the Jharkhand High Court's decision in Rungta Mines Ltd., which clarified that refunds must be examined under the provisions of the existing law, and there were no provisions for cash refunds in the event of failure to meet export obligations.

3. Consideration of input credit as a vested right:
The appellant cited judgments like Eicher Motors Ltd. and Dai Ichi Karkaria Ltd. to argue that taking credit is a substantive right. However, the Tribunal, relying on judgments such as TVS Motor Company Ltd., Nelco Ltd., and ALD Automotive Pvt Ltd., established that input credit is not a vested right but a form of concession provided by the statute, subject to fulfillment of specific conditions.

4. Applicability of Section 142(6) for refund claims:
The Tribunal observed that Section 142(6) pertains to situations involving proceedings of appeal, review, or reference where a judicial or appellate body grants relief post-2017. Since there was no such order in the appellant's case, Section 142(6) was deemed inapplicable. The Tribunal emphasized that the appellant's situation did not involve any pending disputes or assessments relating to entitlement of credit before or after 01.07.2017.

Conclusion:
The Tribunal concluded that the appellant was not entitled to a cash refund under Section 142(3) or 142(6) of the Act. The Tribunal upheld the decisions of the Original Authority and Commissioner (Appeals), noting that the appellant's claim for a cash refund was untenable under the existing law and the GST regime. The appeal was dismissed.

Final Judgment:
Appeal dismissed.