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2024 (10) TMI 7 - AT - Central ExciseRefund of the amount lying in profit and loss account of the appellant - rejection of refund of the amount paid towards Education Cess Secondary Higher Education Cess (SHE Cess) - transitional credit - applicability of Section 142(3) of CGST Act, 2017 - HELD THAT - Cess is commonly employed to connote a tax with a purpose or a tax allocated to a particular thing suggested by the name of the cess. In the present case, it is related to education. Cess is generally for such levy which is for some special administrative expense as shall be suggested by the name of the cess. Education cess was levied by virtue of Finance Act No. 2 of 2004 in Section 92 to 94 thereof to be charged as a duty of excise with an objective to fulfill commitment of the government to provide a finance universalized quality basic education. The definition of 'eligible duties and taxes' as per the explanation 3 under Section 140 of the CGST Act, 2017 was amended with retrospective effect from 01.07.2017 whereby it is specified that cesses are excluded from the definition of 'eligible duties and taxes', Thus, the credit is ab initio not available for utilization for GST. In view of the above, cesses are not be transitioned through TRAN-1, as per the transitional provisions specified under CGST Act, the credit balances not transitioned to GST regime shall lapse, and, as such, the argument of the appellant the impugned credits never lapse, as there is no provision retaining the same is not sustainable. Section 11B the only other provision for refunds in existing laws had been Rule 5 of CCR, 2004. To my understanding the interpretation of Rule 5 of CCR, 2004 is that where any inputs are used in the final products which are cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate products cleared for export, the CENVAT credit in respect of the inputs so used shall be allowed to be utilized by the manufacturer towards payment of duty of excise on any final products cleared for home consumption or for export on payment of duty and where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations as may be specified by the Central Government by notification. This Tribunal also in the case of Steel Strips Ltd. Vs. Commissioner of Central Excise, Ludhiana 2011 (5) TMI 111 - CESTAT, NEW DELHI-LB has held that no equity or good conscience influence fiscal codes without the same being embodied to statutory provisions. The Larger Bench of this Tribunal also held that the plea of injustice or hardship cannot be raised to claim a refund in the absence of statutory mandate. The transitioning in the Electronic Credit Ledger, the amount of such Education Cess and Secondary and Higher Education Cess, does not entitle appellant/assess to utilize the said unutilised amount of Education Cess and Secondary and Higher Education Cess against the Output GST Liability. The taking of the input credit in respect of Education Cess and Secondary and Higher Education Cess in the Electronic Ledger after 2015, after the levy of Cess itself ceased and stopped, does not even permit it to be called an input CENVAT Credit and therefore, mere such accounting entry will not give any vested right to the Assessee to claim such transition and set off against such Output GST Liability after 01.07.2017 - The utilisation of such credit, even if taken in Electronic Ledger and notified in Form TRAN-1, does not guarantee any such right of utilisation independent of other parts of Section 140 specially ignoring Explanation 3. As far as the Section 142(3) of CGST Act is concerned as already appreciated above that the refund has to be dealt with in accordance of Section 11B as already explained above that refund of EC and SHEC, in the given circumstance, shall not be available under Section 11B of Central Excise Act, 2002 nor even under Rule 5 of CCR, 2004 (as already discussed above). No question of any kind of eligibility of the appellant to claim the refund of such credit which is nothing more than a dead claim, at all arises. There are no infirmity in the order under challenge vide which the refund claim for the amount of Cenvat credit of EC and SHEC, paid prior March 2015, has been denied to the appellant as was filed under the garb of transitional provisions of CGST Act, 2017 - appeal dismissed.
Issues Involved:
1. Refund of unspent Education Cess & Secondary and Higher Education Cess (SHE Cess). 2. Legal provisions for refund under CGST Act, 2017 and Central Excise Act, 1944. 3. Applicability of Section 142(3) of CGST Act, 2017. 4. Interpretation of Rule 5 of CENVAT Credit Rules, 2004. 5. Transitional provisions under Section 140 of CGST Act, 2017. 6. Applicability of precedents and judicial decisions. Issue-wise Detailed Analysis: 1. Refund of unspent Education Cess & Secondary and Higher Education Cess (SHE Cess): The appellant sought a refund of Rs. 11,63,244/- for the unspent amount of Education Cess & SHE Cess. The department observed that there is no legal provision for refunding the balance of Education Cess & SHE Cess in the Cenvat credit ledger. The original adjudicating authority rejected the claim for Rs. 8,41,387/- but sanctioned Rs. 3,21,857/- for the unspent amount in the Profit & Loss Account (PLA). Both the appellant and the department appealed this decision, which was dismissed by the Order-in-Appeal dated 22.01.2021. 2. Legal provisions for refund under CGST Act, 2017 and Central Excise Act, 1944: The appellant argued that there is no statutory provision stating that the eligible Cenvat credit of Education Cess & SHE Cess lapses with the introduction of the CGST Act, 2017. They cited Section 142(3) of the CGST Act, 2017, which entitles cash refunds of such amounts. The department countered that the refund of Rs. 3,21,857/- was erroneously sanctioned and should be recovered, emphasizing that the PLA is an advance deposit of Central Excise duty, which falls under Section 11B of the Central Excise Act, 1944, prescribing a one-year time limit for refunds. 3. Applicability of Section 142(3) of CGST Act, 2017: Section 142(3) of the CGST Act, 2017, states that any claim for a refund filed before, on, or after the appointed day should be disposed of according to the existing law, and the amount should be paid in cash. However, the provision must be read in conjunction with Section 11B of the Central Excise Act, 1944, which does not provide for the refund of cesses after they have been omitted. 4. Interpretation of Rule 5 of CENVAT Credit Rules, 2004: Rule 5 of the CENVAT Credit Rules, 2004, allows the refund of unutilized credit only in cases where inputs are used in final products cleared for export. The rule does not permit refunds for any other reason. The Tribunal emphasized that the legislative intent must be interpreted as clearly expressed and cannot be extended to supply any assumed deficiency. 5. Transitional provisions under Section 140 of CGST Act, 2017: Section 140 of the CGST Act, 2017, and its explanations specify the eligible duties and taxes that can be carried forward and adjusted against GST output tax liability. Education Cess and SHE Cess are not included in the list of eligible duties and taxes. Explanation 3 explicitly excludes any kind of cess from being carried forward under the transitional provisions. 6. Applicability of precedents and judicial decisions: The Tribunal referred to multiple judicial decisions, including those of the Hon'ble Apex Court and High Courts, to support its conclusions. Notably, the Apex Court in Union of India and Ors. Vs. IndSwift Laboratories Limited emphasized that a taxing statute must be interpreted based on what is clearly expressed. The Tribunal also cited decisions that no equity or good conscience can influence fiscal codes without statutory provisions. Conclusion: The Tribunal upheld the order under challenge, denying the refund claim for the amount of Cenvat credit of Education Cess & SHE Cess paid prior to March 2015. The appeal was dismissed, affirming that the credit balances not transitioned to the GST regime shall lapse, and there is no provision for their refund under the existing laws. The judgment emphasized a strict interpretation of statutory provisions and transitional arrangements under the CGST Act, 2017.
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