2020 (4) TMI 199 - AT - Central Excise

Jurisdiction - power to issue SCN - Refund of unutilised CENVAT Credit - inclusion of sales to 100% EOUs - HELD THAT - Both the Asst. Commissioner and Commissioner (Appeals) are fully competent to decide the show cause notice not only in terms of CENVAT Credit Rules 2004 but also in terms of the provisions of CGST Act 2017. At this stage, there are no inconsistency in the order of the first appellate authority inasmuch as he has followed the law as it applied during the relevant period - Also, the appellant has so far not been put to any disadvantage because the show cause notice proposing recovery of excess refund is yet to be adjudicated upon by the Asst. Commissioner. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Interpretation of Rule 5 of CENVAT Credit Rules, 2004 regarding refund eligibility.
2. Inclusion of sales to 100% EOUs in refund calculation.
3. Entitlement to take back CENVAT Credit.
4. Impact of CGST Act on CENVAT Credit.
5. Show cause notice for recovery of erroneously sanctioned refund.
6. Competency of authorities under CENVAT Credit Rules and CGST Act.
7. Consistency of the first appellate authority's order.

Analysis:
1. The case involves a dispute related to the interpretation of Rule 5 of the CENVAT Credit Rules, 2004 concerning the eligibility for a refund of unutilized CENVAT Credit. The appellant, engaged in the manufacture and export of granite blocks, sought a refund based on a specific formula outlined in the rule.

2. The primary contention revolved around the inclusion of sales to 100% Export Oriented Units (EOUs) in the calculation of the refund amount. The original authority erroneously considered these sales, leading to a dispute. The first appellate authority ruled that the relevant rules did not permit such inclusion, which resulted in the Revenue's appeal being allowed.

3. The appellant argued that they were entitled to take back the remaining CENVAT Credit in their account, as per the provisions of the CENVAT Credit Rules, 2004. However, the introduction of the CGST Act in July 2017 abolished CENVAT Credit, posing a challenge to the appellant's ability to utilize or claim credit for the remaining amount.

4. The impact of the CGST Act on the CENVAT Credit accrued by the appellant was a crucial aspect of the case. The appellant highlighted Section 142 of the CGST Act, which mandated the carry-forward of CENVAT Credit as input tax credit. The modification of the order by the Commissioner (Appeals) resulted in additional CENVAT Credit, creating a dilemma for the appellant.

5. The existence of a show cause notice for the recovery of the erroneously sanctioned refund added complexity to the case. While the notice was issued, it had not been adjudicated upon, indicating that no demand was currently outstanding against the appellant.

6. The competency of the authorities under both the CENVAT Credit Rules, 2004, and the CGST Act, 2017 was crucial. The Tribunal found no inconsistency in the first appellate authority's decision, emphasizing that the appellant had not suffered any disadvantage as the show cause notice was pending adjudication.

7. Ultimately, the Tribunal upheld the impugned order, rejecting the appeal based on the considerations of the relevant laws and the absence of any immediate adverse impact on the appellant. The decision was pronounced in the Chamber on 18.03.2020.