2024 (12) TMI 74 - AT - Central Excise

Refund claim of CVD and SAD paid - non-fulfilment of export obligations in respect of goods imported before 01.07.2017 under AA and EPCG schemes - HELD THAT - The appellant have paid CVD SAD for the relevant period that is prior to 01.07.2017 at that time the appellant was eligible for Cenvat credit in respect of CVD SAD, since the said duties were paid after 01.07.2017, neither the same could have been used as Cenvat credit under Cenvat Credit Rules, 2004 nor the same can be credited to electronic credit ledger to meet these eventualities. The legislature have provided the refund of the said amount under Section 142 (3) of CGST Act, 2017 read with Section 11B of Central Excise Act, 1944. Therefore, there is absolutely no ambiguity in the provision for refund of such duties which was availed as Cenvat credit for the period prior to 01.07.2017 in terms of Section 142 (3) of CGST Act, 2017. This issue is no longer res-integra as the same has been decided in various judgments - In CCE v. Aculife Healthcare Pvt. Ltd 2024 (5) TMI 190 - CESTAT AHMEDABAD wherein, this Tribunal has upheld the granting of refund to the assessee of CVD SAD paid after introduction of GST, on imports made prior to introduction of GST, due to non-fulfilment of export obligations. This Hon ble Tribunal has upheld the granting of refund under Section 142(3) of the CGST Act, 2017 read with Section 11B of Central Excise Act, 1944, after taking into consideration the judgment of the Hon ble Tribunal at Chennai in the case of Servo Packaging Ltd. 2020 (2) TMI 353 - CESTAT CHENNAI . The appellant are legally entitled for the cash refund of Cenvat credit of CVD SAD, eventhough, paid after 01.07.2017 in terms of Section 142 (3)of the CGST Act, 2017. The impugned order is not sustainable, hence the same is set aside. The appeal is allowed.

Summary

Issues:
Whether refund claim is admissible under Section 142 (3) of CGST Act, 2017 in lieu of CENVAT credit of CVD & SAD paid after the introduction of GST due to non-fulfillment of export obligations against goods imported duty-free prior to the introduction of GST.

Detailed Analysis:

1. Background and Facts:
The case involved M/s Cadila Healthcare Ltd., now known as Zydus Lifesciences Ltd., engaged in manufacturing bulk drugs leviable to excise duty under the Central Excise Act. The appellants imported goods duty-free prior to the introduction of GST but could not fulfill export obligations, leading to payment of Customs duties post-GST introduction.

2. Claim for Refund:
The appellants paid CVD & SAD post-GST introduction but were unable to avail CENVAT credit under GST due to lack of specific provisions. They filed a refund claim under Section 142(3) of the CGST Act, 2017 for the amount paid due to non-fulfillment of export obligations on goods imported before 01.07.2017.

3. Orders and Appeals:
The Deputy Commissioner rejected the refund claim citing Section 142(8)(a) of the CGST Act, 2017. The Commissioner (Appeals) upheld the rejection, stating that CVD and SAD were not duties prescribed under the Central Excise Act, and the provisions of CENVAT Credit Rules did not allow refund in cash.

4. Appellate Tribunal's Decision:
The Tribunal considered precedents and held that the appellants were entitled to a refund under Section 142(3) of the CGST Act, 2017 for CVD & SAD paid post-GST introduction. The Tribunal cited judgments like CCE v. Aculife Healthcare Pvt. Ltd. and the High Court of Gujarat's decision in a similar case, emphasizing the legal entitlement to cash refund for CENVAT credit of CVD & SAD.

5. Conclusion:
The Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellants. The decision was based on the legal entitlement to a cash refund of CENVAT credit of CVD & SAD paid after 01.07.2017, in line with Section 142(3) of the CGST Act, 2017 and relevant judicial precedents.

This comprehensive analysis highlights the key legal issues, factual background, relevant provisions, orders, appeals, and the final decision of the Appellate Tribunal, providing a detailed understanding of the judgment.