2024 (10) TMI 560 - AT - Central Excise

Refund of CENVAT Credit of CVD and SAD under GST regime for imports made prior to GST regime - Advance Authorisations Scheme - Non-fulfillment of export obligation within the prescribed time limit - refund was rejected only on the ground that the amount of CVD and SAD paid by the appellant after 01.07.2017 but for the period prior to 01.07.2017 is not eligible for Cenvat credit to the appellant - HELD THAT - There is no dispute that the CVD and SAD was paid in respect to the imports made prior to GST regime i.e. before 01.07.2017 therefore any CVD and SAD was payable during the period prior 01.07.2017 was available as Cenvat credit. Merely because the payment was made after 01.07.2017 it will not lose the character of Cenvat credit in respect of such payment of CVD and SAD. Section 142 (3) and/or Section 142 (6) of the CGST Act, 2017 was created only to deal with the situation of the kind in the present case. The appellant was clearly entitled for the Cenvat credit of CVD and SAD prior to 01.07.2017 but since the same was paid after 01.07.2017, they were not in a position to avail the Cenvat credit and utilize the same. Therefore the appellant is prima facie entitle for the refund of CVD and SAD being in the nature of Cenvat credit under Section 142 (3) and/or Section 142 (6) of the CGST Act, 2017. All the impugned orders are set aside and appeals are allowed by way of remand to the adjudicating authority for processing the refund claim in accordance with law.

Summary

Issues:
Refund claim for CENVAT Credit of CVD and SAD under GST regime for imports made prior to GST regime.

Analysis:
The case involved the Appellants who imported duty-free raw materials under Advance Authorisations from the DGFT for manufacturing Pharmaceutical Products to be exported. Due to non-fulfillment of export obligations within the stipulated period, the Appellants had to pay import duties post-GST regime on the raw materials imported pre-GST regime. The issue revolved around the Appellants' entitlement to avail CENVAT Credit of CVD and SAD paid post-GST regime for imports made pre-GST regime. Both the Adjudicating Authority and the First Appellate Authority rejected the refund claims stating that the amount claimed was not CENVAT Credit and that Section 142 of the CGST Act, 2017, did not apply.

The Appellant's counsel argued that even though CVD and SAD were paid during the GST regime, the payment was for imports made before the GST regime when CENVAT Credit was available. Citing relevant judgments, the counsel contended that the Appellants were entitled to claim a refund under Section 142(3) and Section 142(6) of the CGST Act, 2017. The Tribunal noted that the only reason for the refund rejection was the timing of payment during the GST regime when CENVAT Credit provision was not available. However, since the CVD and SAD were paid for imports made pre-GST regime, they should be considered as CENVAT Credit. The Tribunal held that the Appellants were entitled to claim a refund under Section 142(3) and Section 142(6) of the CGST Act, 2017, as the situation fell within the purview of these provisions.

The Tribunal, after considering submissions from both sides, found that the Appellants were entitled to the CENVAT Credit of CVD and SAD paid post-GST regime for imports made pre-GST regime. It was established that the Appellants should be allowed the refund as the payments were essentially in the nature of CENVAT Credit. The Tribunal set aside the impugned orders and allowed the appeals, remanding the case to the adjudicating authority for processing the refund claim in accordance with the law.