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TMI Blog2023 (2) TMI 1297X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of redemption of the advance authorizations during the period April 2018 and May 2018, it was observed that there was a shortfall in the fulfillment of export obligations. Accordingly, the appellants paid the amount of customs duty including CVD (Rs.26,18,984/-) and SAD (Rs. 9,79,363/-) forgone on the quantities of duty free imported raw material proportionate to the shortfall in the fulfillment of export obligation vide several challans during the period April 2018 and May 2018. 2.3 Appellant claims that prior to 01.07.2017, they were entitled to avail Cenvat credit on the CVD and SAD paid for regularization of unutilized duty-free inputs imported against the advance authorization Scheme in terms of Rule 3 read with Rule 9 of the Credit Rules. However, post implementation of the GST (w.e.f. 1.7.2017), there is no specific provision for availing credit of CVD and SAD paid post 1.7.2017. In view of transitional provision i.e., Section 140(1) of CGST Act, 2017, the credit lying in the ER-1 return on 30.6.2017 was allowed to be carried forward in GST. However, there is no specific provision for transfer of credit of CVD and SAD paid subsequent to introduction of GST in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such payment is saved. Therefore, the appellants is entitled to claim credit and consequent refund of the said amount under Section 142(3) of the CGST Act. * Cenvat Credit is a vested and indefeasible right of the appellants. Vested right cannot be taken away by introduction of new tax regime as has been held in Adfert Technologies Pvt Ltd 2019 (11) TMI 282 - P&H High Court]. Department SLP was dismissed by the Apex Court as reported in [2020 (3) TMI 188 - SC]. * Section 142(3) specifically provides to claim refund of credit paid under existing regime. Therefore, the appellants are entitled for refund in cash under Section 142(3). * Reliance is placed on following decisions of CESTAT in support of their claim to refund o New Age Laminators Pvt. Ltd [2022 (3) TMI 748 - CESTAT DELHI] o Flexi Caps & Polymers Pvt. Ltd. [2021 (9) TMI 917 - CESTAT DELHI] o Mithila Drugs Ltd. [2022(3) TMI 58 - CESTAT NEW DELHI] o ITCO Industries Ltd. [2022 (6) TMI 1040 - CESTAT CHENNAI] o Clariant Chemicals India Ltd. [2022 (10) TMI 796- CESTAT MUMBAI] o Ganges International Pvt. Ltd. [2022 (3) TMI 544- Madras High Court] o GEE Ltd. [2022 (10) TMI 957 - CESTAT Mumbai] o OSI S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund as per the provisions given under sub-section (2) of section 11B of the Central Excise Act whereas the subject refund claim filed by the appellant does not fall under the provisions of Section 11B(2), sub section(a), (b), (d), (e) and (f). In respect of Section 11B(2) subsection (c), there is no provision under the CENVAT Credit Rules 2004, Central Excise Act, 1944 and Central Excise Rules, 2002 which allows refund of CVD and SAD paid due to non-fulfillment of export obligation observed during the assessment of advance authorization. ii) Customs duties paid by the assesses are by compulsion when they realized that they would not be able to fulfill export obligation proportionately for imports under the said advance authorization only on receipt of demand note from DGFT. Since the liabilities were discharged only after demand was raised by DGFT, therefore fault is not bonafide, as they have not paid such amount suomoto. The cenvat credit for such payment of CVD and SAD is not eligible in terms of Rule 9(1)(b) of Cenvat Credit Rules, 2004 as the assessee did not pay such customs duties suo moto themself but paid only after on the basis final assessment by the Customs. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim under the existing law. I find that under existing laws in the era of Central Excise regime, matters related to refund of Cenvat credit was dealt under Rule-5 of Cenvat credit Rules, 2004 read with section 11B of the Central excise act, 1944. The provision of Rule -5 of the CENVAT Credit Rules, 2004 is as under: RULE-5- Refund of CENVAT Credit- (1) A manufacturer who clears a final product or an intermediate product for export without payment of duty under bond or letter of undertaking, or a service provider who provides an output service which is exported without payment of service tax, shall be allowed refund of CENVAT credit as determined by the prescribed formula subject to procedure, safeguards, conditions and limitations as may be specified by the Board by notification in the Official Gazette: 6.1 I find that above mentioned Rule -5 provides refund of Cenvat credit, only in those cases where credit has been taken and utilized in respect of final product or an intermediate product or output service which has been cleared for export without payment of duty. Further, explanation to Section 11 B of the Central Excise Act, 1944 provide that refund includes rebate of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon by the appellant is not binding upon me. I place my reliance on the judgement of Hon'ble CESTAT Mumbai ne case of Comteck Lac oratories Vs CCE. Mumbai reported in 2000 (118) ELT 30 (TriMum) wherein it was held that "We find that the Commissioner (Appeals) has made an error in holding that the view held by his predecessor was binding on him in the same circumstances an order of the superior format would be binding on the Commissioner (Appeals) but his freedom to critically examine his predecessor's finding cannot be taken away. The learned Commissioner (Appeals) could have extracted his predecessor's findings and could have agreed therewith and then dismissed the appeal before him. In not doing so, he has not applied his mind to the facts before him. This order therefore, cannot be sustained.(para 3)" 4.3 Appellants had imported raw materials under various Advance License as against export of pigments imported much prior to the date appointed day under GST Regime i.e. 1st July 2017, when the scheme of taxation under Central Excise Act, 1944, and CENVAT Rules, 2004, and they were entitled to the CENVAT Credit in respect of the CVD and SAD paid. In terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r completion of export obligation was over much before the date of introduction of GST regime. Appellant themselves had not opted for payment of the duties foregone, and delayed the payment of the duties due from them to later date in 2018. They paid the duties due along with the interest due. 4.5 The appellants claim that they are entitled to cash refund of the above amounts paid subsequently under the head of CVD and SAD, as they have paid these duties against the goods imported by them much before the introduction of GST Regime. The scheme of the erstwhile CENVAT Credit has been made in terms of the Section 37 (2) () of the Central Excise Act,1944 which is reproduced below: "(xvia) provide for the credit of duty paid or deemed to have been paid on the goods used in, or in relation to the manufacture of excisable goods." From the above provision, it is well evident that the CENVAT Credit Rules, 2004 were only permitting the credit of the duty paid or deemed to be paid. Rule 4 of the CENVAT Credit Rules, 2004 provided as follows: 4. "Conditions for allowing CENVAT credit.- (1 ) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce authorization issued to them. Indirectly they intend claim the refund of the amount which is otherwise inadmissible to them and following is settled position in law: a. Devendra Kumar [(2013) 9 SCC 363] 23. More so, if the initial action is not in consonance with law, the subsequent conduct of a party cannot sanctify the same. "Subla Fundamento cedit opus"- a foundation being removed, the superstructure falls. A person having done wrong cannot take advantage of his own wrong and plead bar of any law to frustrate the lawful trial by a competent Court. In such a case the legal maxim Nullus Commodum Capere Potest De Injuria Sua Propria applies. The persons violating the law cannot be permitted to urge that their offence cannot be subjected to inquiry, trial or investigation. (Vide: Union of India v. Maj. Gen. Madan Lal Yadav, AIR 1996 SC 1340; and Lily Thomas v. Union of India & Ors., AIR 2000 SC 1650). Nor can a person claim any right arising out of his own wrong doing. (Juri Ex Injuria Non Oritur)." b. Mahender Singh [2022 SCC OnLine SC 909] 15. A three Judge Bench of this Court in a judgment reported as Chandra Kishore Jha v. Mahavir Prasad & Ors. [(1999) 8 SCC 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 140. (1) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT Credit of eligible duties carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law within such time and in such manner as may be prescribed: PROVIDED that the registered person shall not be allowed to take credit in the following circumstances, namely: - (i) where the said amount of credit is not admissible as input tax credit under this Act; or (ii) where he has not furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date; or (iii) where the said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government. 140 (5) A registered person shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and the amendment of the Finance Act, 1994 (32 of 1994) (hereafter referred to as "such amendment" or "amended Act", as the case may be) to the extent mentioned in the sub-section (1) or section 173 shall not- i. revive anything not in force or existing at the time of such amendment or repeal; or ii affect the previous operation of the amended Act or repealed Acts and orders or anything duly done or suffered thereunder; or iii. affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders under such repealed or amended Acts: PROVIDED that any tax exemption granted as an incentive against investment through a notification shall not continue as privilege if the said notification is rescinded on or after the appointed day; or iv. affect any duty, tax, surcharge, fine, penalty, interest as are due or may become due or any forfeiture or punishment incurred or inflicted in respect of any offence or violation committed against the provisions of the amended Act or repealed Acts; or v. affect any investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t no refund shall be allowed of any amount of CENVAT Credit where the balance of the said amount as on the appointed day has been carried forward under the CGST Act. 41. Thus, section 142(3) of CGST, Act clearly provides that refund application with respect of any amount relating to CENVAT Credit, duty, tax, interest or any other amount paid under the existing law is to be disposed of in accordance with the provisions of existing law and if any such amount accrues the same shall be paid in cash. Such right to refund in cash has been conferred notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11-B of the Central Excise Act, 1944. 42. It is not in dispute that the refunds under the existing law of Service Tax as well as Central Excise Act, 1944 are governed by section 11B of the Central Excise Act, 1944 and subsection 2 of section 11 B also refers to application for refund made under section 11 B(1) of Central Excise Act, 1944. Further section 11B(3) of Central Excise Act, 1944 clearly provides that all kinds of refunds including those arising out of judgement , decree or orders of cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 11B(2) of Central Excise Act, 1944. 45. The provision of section 142(3) does not entitle a person to seek refund who has no such right under the existing law or where the right under the existing law has extinguished or where right under the new CGST regime with respect to such claim has not been exercised in terms of the provision of CGST, Act and the rules framed and notifications issued. Meaning thereby, section 142(3) does not confer a new right which never existed under the old regime except to the manner of giving relief by refund in cash if the person is found entitled under the existing law in terms of the existing law. Section 142(3) does not create any new right on any person but it saves the existing right which existed on the appointed day and provides the modalities for refund in cash if found entitled under the existing law as the entire claim is mandated to be dealt with as per the existing law. It neither revive any right which stood extinguished in terms of the existing law nor does it create a new right by virtue of coming into force of CGST, Act. 46. Section 174 of the CGST Act read with section 6 of the General Clauses Act saves the right acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication for refund filed by the petitioner. 50. It is not in dispute that the petitioner has claimed the credit of service tax involved in the present case paid on "port services" as "input service" in ST-3 return filed on 22.09.2017, though they were not entitled to claim such a credit. It is further not in dispute that the petitioner did not include the impugned service tax paid on "port services" in its ER-1 return and accordingly was neither entitled to include nor included the same as transitional credit in TRAN-1 under CGST Act. As per the notification (Annexure-5) extending the date of filing TRAN-1 to 31.10.2017, the same was in relation to certain service tax issues which were paid after 30.06.2017 under reverse charge basis to cover instances of bills raised on 30.06.2017 since credit is available only if the payment is made and the payment in such cases could be made only after 30.06.2017. However, in the instant case the bill was admittedly generated on 23.05.2017, services availed and bill amount including service tax was paid in April 2017 but the original bill did not reach the petitioner for unknown/undisclosed reasons. 51. It is apparent from the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner had already taken credit of the service tax paid on port services in ST-3 Return of service tax although admittedly the petitioner was not entitled to take such credit in ST-3 Return. On account of aforesaid three distinct reasons the petitioner was rightly held to be not entitled to refund under section 142(3) of CGST, Act by the impugned orders. 53. All the aforesaid provisions referred to and relied upon by the learned counsel of the petitioner do not entitle a person like the petitioner to any relief in the circumstances of acts and omissions of the service provider (port authority) or the service recipient (the petitioner) who have failed to comply the provision of law, both under the existing law and also under the CGST Act. The relied upon provisions of CGST Act do not cover any such situation relating to any consequences due to inter parte acts and omissions. In the instant case, as per the case of the petitioner, the entire problem has cropped up due to non-receipt of the invoice in original from the port authorities although the port services were availed and payments for the same to the port authorities were made by the petitioner in the month of April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon various decisions of this tribunal which go contrary to the above referred decision of the Hon'ble High court of Jharkhand hence by having taken the view in line with the above decision of Hon'ble High Court I do not find any of these decisions relevant. 4.9 Appellant have relied upon the decision in case of GEE Ltd authored by me in support of their claim to refund in terms of Section 142 (3). The said decision do not support the case of the appellant for the reason that in that case by Order in Original No 38/BR-38/Th-I/2010 dated 30.07.2010, certain credit was denied to the appellant and was appropriated against the amounts already deposited by them. In appeal the tribunal has vide the order dated 11.10.2022 remanded the matter back to re-determine the amount of credit to be denied. In the said case entire amounts were paid during the period when the Central Excise Act, 1944 and CENVAT Credit Rules, 1944 were in force. It is not even the case like the case of present appellant where in the entire amount sought as refund has been paid after the appointed day for shift from the Central Excise Regime to CGST Regime. Hence this decision do not support the case of appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by them. However, the said claim made by the petitioners can very well be considered for the purpose of permitting the petitioners to carry forward the accrued credit to the electronic credit ledger of the GST regime. (iii) After considering the said applications, as indicated above, the necessary order shall be passed by the respondents within a period of six weeks from the date of receipt of a copy of this order. It is made clear that, before passing the orders as indicated above, an opportunity of being heard shall be given to the petitioners, so that the petitioners can put forth their case by providing all necessary inputs to the satisfaction of the authorities to take a decision thereon." 7.It is evident from the aforesaid order that the learned Judge, considering the peculiar circumstances of the case, viz., the assessee is entitled to avail cenvat credit of the service tax already paid, which fact was also admitted by the Revenue, but they were unable to claim, due to transitional provision has come into effect from 01.07.2017, ordered the writ petition by setting aside the rejection order of the appellant and remanding back the matter to the appellant for fresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nutilised. 21. In this regard, a reference can usefully be made to the judgment of the Hon'ble Supreme Court setting out the fundamental legal principles. These are that in a fiscal statute, nothing can be read, into its provisions and rather should not be read, which is expressly not there. In other words, an implied meaning cannot be given. The Hon'ble Supreme Court in one of the decisions, in the case of Union of India and Ors. v. Ind-Swift Laboratories Limited - (2011) 4 SSC 635 = 2011 (265) E.L.T. 3 (S.C.) summarised the legal position thus :- "20. A taxing statute must be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in a taxing statute so as to supply any assumed deficiency. In support of the same we may refer to the decision of this Court in CST v. Modi Sugar Mills Ltd. wherein this Court at AIR para 11 has observed as follows : "11. .....In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or export, or used in providing output service which is exported, the CENVAT credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of, (i) duty of excise on any final products cleared for home consumption or for export on payment of duty; or (ii) service tax on output service, and where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification : Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims a rebate of duty under the Central Excise Rules, 2002, in respect of such duty : Provided further that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, as amended by clause 72 of the Finance Bill, 2005, the clause which has, by virtue of the declaration made in the said Finance Bill, under the Provisional Collection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditional duties of excise on final products at the time of clearance of the same. According to the case of the assessee, by a notification dated 9th July, 2004, the Government of India had exempted all goods appearing within the Schedule of the said Act of 1978. The assessee utilised credit balance of additional duty of excise in their RG-23A Part II Register as on 6th September, 2004, which could not be utilised in future and had remained unutilised. The condition was that since none of the products are charged to additional duties of excise, it would not be possible to utilise the said unutilised credit and the assessee was liable for cash refund. This plea was not accepted in the order-in-original, but came to be accepted by the appellate authority. The Revenue approached the CESTAT against the appellate authority's view, but the CESTAT dismissed the Revenue's appeal. Now, if the cash refund was not permissible, then, it is evident that by reading into the provision something which is expressly not there, such a refund was sought. 25. In the case of Commissioner of Central Excise v. Gujarat Narmada Fertilizers Company Limited, - (2009) 9 SSC 101 = 2009 (240) E.L.T. 661 (S.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e final product or not. The crucial requirement, therefore, is that all goods "used in or in relation to the manufacture" of final products qualify as "input". This presupposes that the element of "manufacture" must be present. 29. In J.K. Cotton Spg. & Wvg. Mills Co. Ltd. v. STO [AIR 1965 SC 1310 : (1965) 16 STC 563] this Court held that the expression "in the manufacture of goods" should normally encompass the entire process carried on by the dealer of converting raw material into finished goods. It was further held that where any particular process (generation of electricity) is so integrally connected with the ultimate production of goods, that, but for such process, manufacture of goods would be inexpedient, then goods required in such process would fall within the expression "in the manufacture of goods". 30. In Union Carbide India Ltd. v. CCE [1996 (86) E.L.T. 613 (Tri.)] a larger Bench of CEGAT observed that a wide impact of the expression "used in relation to manufacture" must be allowed its natural play. Inputs (raw materials) used in the entire process of conversion into finished products or any other process (like electricity generation) which is integrally connec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Cenvat Credit Rules, 2004 reads as under :- "Rule 11. Transitional provision. - (1) Any amount of credit earned by a manufacturer under the CENVAT Credit Rules, 2002, as they existed prior to the 10th day of September, 2004 or by a provider of output service under the Service Tax Credit Rules, 2002, as they existed prior to the 10th day of September, 2004, and remaining unutilized on that day shall be allowed as CENVAT credit to such manufacturer or provider of output service under these rules, and be allowed to be utilized in accordance with these rules. (2) A manufacturer who opts for exemption from the whole of the duty of excise leviable on goods manufactured by him under a notification based on the value of quantity of clearances in a financial year, and who has been taking CENVAT credit on inputs or input services before such option is exercised, shall be required to pay an amount equivalent to the CENVAT credit, if any, allowed to him in respect of inputs lying in stock or in process or contained in final products lying in stock on the date when such option is exercised and after deducting the said amount from the balance, if any, lying in his credit, the balance, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturer or provider of output service under these rules, and be allowed to be utilised in accordance with these rules. This is how the transitional provision enables carrying forward of the unutilised Cenvat credit. That is a distinct contingency altogether. That transitional provision does not enable us to hold that the amount of unutilised Cenvat credit can be refunded in cash. 29. We do not think that by taking assistance of this provision, we will be able to hold as contended by Mr. Patil that the Cenvat credit can be refunded even in relation to those inputs which have not been used in the manufacture of the final product or the exported goods. We are called upon to read something in the substantive rule and which is totally absent therein. When Rule 5 follows Rule 4, which is titled as "Conditions for Allowing Cenvat credit", then, we must understand the scheme in such manner as would make the law workable and consistent. Refund of Cenvat credit in terms of Rule 5 is permissible only when there is a clearance of a final product of a manufacturer or of an intermediate product for export without payment of duty under a bond or letter of undertaking of a service provider, who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Bengaluru raised several grounds and pleas, the High Court referred to the arguments and in para 4 of its order, reproduced Rule 5 of the Cenvat Credit Rules, 2002. In para 5, the reasoning of the High Court of Karnataka reads thus :- "5. There is no express prohibition in terms of Rule 5. Even otherwise, it refers to a manufacturer as we see from Rule 5 itself. Admittedly, in the case on hand, there is no manufacture in the light of closure of the Company. Therefore, Rule 5 is not available for the purpose of rejection as rightly rules by the Tribunal. The Tribunal has noticed that various case laws in which similar claims were allowed. The Tribunal, in our view, is fully justified in ordering refund particularly in the light of the closure of the factory and in the light of the assessee coming out of the Modvat Scheme. In these circumstances, we answer all the three questions as framed in para 17 against the Revenue and in favour of the assessee." 32. Thus, the High Court of Karnataka took the view that there is no express prohibition in terms of Rule 5 and that rule refers to a manufacturer. Thus, even if there is no manufacture in the light of the closure of the facto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jasthan High Court concluded that the Revenue cannot seek to urge before that High Court that the view taken by four different High Courts approving the order of CESTAT has lost its persuasive value, particularly when the Special Leave Petitions against the view taken by four different High Courts were either not filed or filed but not entertained. Thus, the Tribunals have taken a consistent view and the Revenue could not succeed in having that set aside. It is in these circumstances, the Rajasthan High Court negatived the contention of the Revenue that the Tribunal under the jurisdiction of that High Court could have distinguished the orders and judgments of its Benches. That was found to be contrary to the judicial discipline. It is in these circumstances so also when there was a Larger Bench view of the Tribunal having a binding effect, that the principle of judicial discipline was pressed into service. 36. After the view taken in Steel Strips Ltd. (supra) and which was also fairly brought to our notice, it is evident that this principle has no application to the facts and circumstances before us. 37. Finally, we do not find any merit in the arguments of Mr. Patil to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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