2021 (11) TMI 423 - AT - Central Excise

Refund claim of Education Cess (E-Cess) and Higher Secondary Education Cess (SHE Cess) as was in balance on 28.02.2015 and carried forward till 30.06.2017 - wrong interpretation to the N/N. 12/2015 - HELD THAT - The E-cess and SHE-cess were Cenvatable, the credit whereof was allowed even for such inputs and capital goods which were received by the manufacturer even after 01.03.2015. The appellant had accumulated credit of E-cess and SHEcess. However, the same could not be utilized till 30.06.2017. The unutilized amount is the assessee s money and, accordingly, has to be refunded to the assessee - The right of credit becomes absolute when the input is used in the manufacture of the final product. In the present case since the E-cess and SHE-cess were no more leviable after 28.02.2015, that the credit on the imports received by the assessee post said date was permitted to be utilized for payment of duty of excise. It is observed that Commissioner (Appeals) and even the Original Adjudicating Authority has given the wrong interpretation to the said notification by specifically holding that the credit of E-Cess and SHE-cess could not be utilized for payment of excise duty by virtue of notification No. 12/2015. This reason itself is sufficient to set aside the order under challenge - It is further observed that with effect from 01/07/2017, the new Goods and Services Tax Act became operational, that the utilization of the said balance became impossible. However, in terms of section 142 of the said new Act, the amount is made refundable to the appellant in cash. Denial thereof by Commissioner (Appeal) is highly unaccepted and is held absolutely unreasonable - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection of Education Cess (E-Cess) and Higher Secondary Education Cess (SHE Cess) balance from 28.02.2015 to 30.06.2017.

Analysis:
The appellant filed a refund claim for the balance of E-Cess and SHE-Cess as on 30.06.2017, which was rejected initially and also on appeal. The appellant contended that the authorities wrongly interpreted notification no. 12/2015 and failed to recognize the amendment in CENVAT credit rules in 2015. The appellant argued that the unutilized credit should be refunded as it merged with basic Cenvat credit after the cess was no longer leviable. The Department Representative argued that once the amount lapsed, its refund was not permissible even under the CGST Act.

Upon reviewing the facts, it was established that E-Cess and SHE-Cess were leviable until 28.04.2015, and the credit of these cesses paid on imports or capital goods after 01.03.2015 could be used for excise duty payment. The appellant's refund claim was found to be within time, with no pending government dues or unjust enrichment. The balance of E-Cess and SHE-Cess could not be carried forward in the GST regime due to a lack of a column in the form.

The Tribunal observed that the appellant had accumulated credit of E-Cess and SHE-Cess, which could not be utilized until 30.06.2017. Citing the Eicher Motors Ltd. case, the Tribunal emphasized that the unutilized amount belonged to the assessee and must be refunded. The authorities' wrong interpretation of notification no. 12/2015 was highlighted, leading to the order's set aside. The denial of refund by the Commissioner (Appeal) post-GST implementation was deemed unreasonable, and the appeal was allowed.

In conclusion, the Tribunal set aside the order rejecting the refund claim of E-Cess and SHE-Cess balance, emphasizing the appellant's right to refund based on the unutilized credit and the authorities' misinterpretation of relevant notifications and rules.