2022 (3) TMI 748 - AT - Central Excise

Refund on the CVD and SAD paid for regularisation of advance licence (import licence), which have been deposited on after 01.07.2017 (implementation of GST) - rejection of refund on the ground that the duty was paid by the appellant after pointing out by the competent authority for failure of their export obligation - amounts paid do not fall under eligible cenvat credit or not - the refund filed is fit for consideration in terms of Section 142(6) of CGST Act, 2017 or not - HELD THAT - The payment of CVD and SAD subsequently during GST regime, for the imports made prior to 30.06.2017 is not disputed under the advance authorisation scheme. It is also not disputed that the appellant have paid the CVD and SAD in May, 2018 May, 2019, by way of regularisation on being so pointed out by the Revenue Authority. Further, it is found that the Court below have erred in observing in the impugned order, that without producing proper records of duty paid invoices etc. in manufacture of dutiable final product, refund cannot be given. Also, the refund of CVD and SAD in question is allowable, as credit is no longer available under the GST regime, which was however available under the erstwhile regime of Central Excise prior to 30.06.2017. The appellant is entitled to refund under the provisions of Section 142(3) and (6) of the CGST Act - the jurisdictional Assistant Commissioner are directed to grant refunds to the appellants of the amount of SAD CVD as reflected in the show causes notices - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund rejection on CVD + SAD paid for regularisation of advance licence post-GST implementation.

Analysis:
The appellant, engaged in manufacturing, imported inputs without payment of Customs duty against an Advance Licence. Upon failure to fulfill export obligations, they paid Customs duties post-GST implementation. The issue was whether they could claim cenvat credit of CVD and SAD. Show cause notices were issued proposing refund rejection, citing inadmissibility of credit under CGST Act. The Court below rejected the refund claims.

The appellant appealed to the Commissioner (Appeals), who noted that Cenvat Credit Rules allow credit of CVD and SAD paid under the Customs Tariff Act but observed that post-GST implementation, such credit couldn't be availed. Import under advance authorisation was conditional, and availing credit upon failure would defeat the purpose. Thus, the refund claims were rejected.

The Tribunal heard the parties and reviewed the case. It acknowledged the payment of CVD and SAD post-GST for imports made pre-GST under the advance authorisation scheme. The Court below erred in demanding detailed records for refund approval. As credit was no longer available under GST but was under the previous Central Excise regime, the Tribunal held the appellant entitled to a refund under CGST Act provisions.

Consequently, the Tribunal directed the Assistant Commissioner to grant refunds of SAD & CVD within 45 days with interest under the Central Excise Act. The impugned orders were set aside, and both appeals were allowed.