2020 (2) TMI 353 - AT - Customs

Refund of Countervailing Duty (CVD) and Special Additional Duty (SAD) - non-fulfilment of its export obligations - Section 142 (3) of the C.G.S.T. Act, 2017 - HELD THAT - The availability of CENVAT paid on inputs despite failure to meet with the export obligation may not hold good here since, firstly, it was a conditional import and secondly, such import was to be exclusively used as per FTP. Moreover, such imported inputs cannot be used anywhere else but for export and hence, claiming input credit upon failure would defeat the very purpose/mandate of the Advance Licence. Hence, claim as to the benefit of CENVAT just as a normal import which is suffering duty is also unavailable for the very same reasons, also since the rules/procedures/conditions governing normal import compared to the one under Advance Authorization may vary because of the nature of import. Admittedly, the inputs imported have gone into the manufacture of goods meant for export, but the export did not take place. At best, the appellant could have availed the CENVAT Credit, but that would not ipso facto give them any right to claim refund of such credit in cash with the onset of G.S.T. because CENVAT is an option available to an assessee to be exercised and the same cannot be enforced by the CESTAT at this stage. There is no question of refund - Appeal dismissed - decided against appellant.

Summary

Issues:
Denial of refund of Countervailing Duty (CVD) and Special Additional Duty (SAD) under Section 142 (3) of the C.G.S.T. Act, 2017 due to non-fulfillment of export obligations against Advance Authorization.

Analysis:
The appellant sought a refund of Customs Duty paid for unfulfilled export obligations under Advance Authorization. The Customs Duty was paid due to lack of export orders, prompting the appellant to close the export obligation by paying the duty along with interest. The appellant claimed eligibility for refund of CVD and SAD paid since the inputs imported were used in manufacturing final products on which Central Excise Duty/G.S.T. was paid. The Adjudicating Authority and the Commissioner of G.S.T. and Central Excise rejected the refund claim, leading to the current appeal before the Tribunal.

During the hearing, the appellant's advocate argued that the duty paid on import should allow for CENVAT Credit availability. However, the Authorized Representative for the Revenue contended that the duty-free import under Advance Authorization was subject to fulfilling export obligations, which the appellant failed to meet, justifying the duty payment.

The Tribunal deliberated on whether the appellant could claim a refund under Section 142 (3) of the C.G.S.T. Act, 2017 for Customs Duty paid due to non-fulfillment of export obligations. It was noted that the decisions cited by the appellant did not directly address duty refund arising from export obligation failure under Advance Authorization. The Tribunal highlighted the conditions under the Foreign Trade Policy and relevant notifications requiring duty payment in case of export obligation default.

The Tribunal emphasized that the purpose of Advance Authorization was specific to export-oriented use of imported inputs. Therefore, claiming CENVAT benefit post non-fulfillment of export obligations would defeat the license's intent. The legislative framework anticipated non-fulfillment scenarios, directing payment of duty in such cases. The Tribunal concluded that the appellant's situation did not warrant a refund, upholding the lower authorities' decision to reject the claim.

In light of the above analysis, the Tribunal dismissed the appeal, affirming the denial of the refund claim for CVD and SAD paid due to unmet export obligations against Advance Authorization.