2022 (6) TMI 1040 - AT - Central Excise

Refund of CENVAT credit of CVD and SAD paid by them - rejection of claim invoking Rule 9 (1) (b) of Cenvat Credit Rules 2004 - Department is of the view that credit is not eligible as appellant has paid the duties only after issuing a demand notice - HELD THAT - On perusal of the alleged demand notice it is merely in the nature of an intimation letter and has not been issued invoking any provisions of Customs law or Excise law. Further in such intimation also there is no allegation of any fraud collusion or suppression of facts with intent to evade payment of duty. There is no evidence placed before me to establish that the duties were paid after adjudication and rendering a finding of fraud collusion or suppression of fact with intent to evade payment of duty. In such circumstances the credit cannot be denied - the appellant is eligible for credit of CVD and SAD paid by them. The Tribunal in the case of M/S. CIRCOR FLOW TECHNOLOGIES INDIA PRIVATE LTD. VERSUS PRINCIPAL COMMISSIONER OF GST CENTRAL EXCISE COIMBATORE 2021 (12) TMI 675 - CESTAT CHENNAI and M/S MITHILA DRUGS PVT. LTD. VERSUS COMMISSIONER CENTRAL GOODS AND SERVICE TAX UDAIPUR (RAJASTHAN) 2022 (3) TMI 58 - CESTAT NEW DELHI had analysed a similar issue. In M/s.Mithila Drugs Pvt. Ltd. the facts are identical to that of the instant case where it was held 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. I further find that 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 rejection of refund claims cannot be justified - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Rejection of refund claims for CVD and SAD paid by the appellant
- Eligibility of the appellant for credit of CVD and SAD
- Interpretation of Rule 9 (1) (b) of Cenvat Credit Rules, 2004
- Application of Section 142 (3) of GST Act, 2017 for refund claims
- Comparison with previous legal decisions

Analysis:

The case involves the rejection of refund claims for Countervailing Duty (CVD) and Special Additional Duty (SAD) paid by the appellant. The appellant imported raw materials against advance authorizations but failed to meet the export obligation, leading to a deficiency letter and demand notice for non-fulfillment of export obligations. The appellant paid Customs duties, CVD, and SAD with interest. Subsequently, due to the introduction of GST, the appellant could not avail input credit of CVD and SAD, leading to refund claims of Rs.9,76,684/- and Rs.3,07,305/-.

The appellant argued that under Rule 3 of Cenvat Credit Rules, 2004, they are eligible for credit of CVD and SAD paid. The appellant contended that the denial of credit by the Department was based on the issuance of a demand notice, which the appellant argued was merely an intimation letter and did not establish fraud or suppression of facts. The appellant emphasized that credit can only be denied in cases of fraud, collusion, or wilful misstatement, which were not present in this situation.

The Tribunal analyzed Rule 9 (1) (b) of Cenvat Credit Rules, 2004, which outlines the basis for availing CENVAT credit. The Tribunal held that the Department's rejection of the claims was unfounded as the alleged demand notice was not issued under relevant provisions, and there was no evidence of fraud or suppression of facts. The Tribunal referenced previous decisions to support the appellant's eligibility for credit of CVD and SAD paid by them.

Regarding refund claims under Section 142 (3) of GST Act, 2017, the Tribunal noted that every claim for refund should be processed under the existing law and allowed in cash. The Tribunal found that the rejection of refund claims lacked justification and set aside the impugned orders, allowing the appeals with consequential relief as per law.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing their eligibility for credit of CVD and SAD paid, and directed the Department to grant refunds within a specified timeframe. The decision was based on the absence of fraud or suppression of facts and in alignment with legal precedents and provisions of the GST Act, 2017.

Judgment:
The Tribunal allowed the appeals, set aside the impugned orders, and directed the Department to grant refunds to the appellant for CVD and SAD paid, in accordance with the provisions of the law and previous legal decisions.