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TMI Blog2024 (7) TMI 541X X X X Extracts X X X X X X X X Extracts X X X X ..... interest or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of the existing law and any amount eventually accruing to him, shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provision of sub-section (2) of section 11B of the Central Excise Act (unjust enrichment).' The present appeal that has been filed by the department to assail the order passed by the Commissioner (Appeals) would, therefore, have to be dismissed and is dismissed. - MR. DILIP GUPTA, PRESIDENT AND MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) Shri Rakesh Agarwal, Authorized Representative for the Department Ms. Sukriti Das and Shri Shivam Bansal, Advocates for the Respondent ORDER This appeal has been filed by the department for quashing the order dated 08.07.2020 passed by the Commissioner (Appeals) Customs, CGST Central Excise, Indore [the Commissioner (Appeals)], by which the appeal filed by M/s. Shakti Pumps (I) Limited, [Shakti Pumps] against the order dated 11.02.2020 passed by the Assistant Commissioner has been allowed and the order has been set aside. The Assistant Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exemption contained herein, on the imported materials in respect of which the conditions specified in this notification are not complied with, together with interest at the rate of fifteen percent per annum from the date of clearance of the said materials. (v) that in respect of imports made after the discharge of export obligation in full, if facility under rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or sub-rule(2) of rule 19 of the Central Excise Rules, 2002 or of CENVAT Credit under CENVAT Credit Rules, 2004 has been availed, then the importer shall, at the time of clearance of the imported materials furnish a bond to the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, binding himself, to use the imported materials in his factory or in the factory of his supporting manufacturer for the manufacture of dutiable goods and to submit a certificate, from the jurisdictional Central Excise officer or from a specified chartered accountant within six months from the date of clearance of the said materials, that the imported materials have been so used. Provided that if the importer pays additional duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eking refund of CENVAT credit in cash of CVD amounting to Rs. 1,35,10,358/- by the first application dated 21.06.2019, and refund of CENVAT credit in cash of SAD of Rs. 1,10,44,821/- by the second application dated 25.06.2019 in terms of section 142(3) and section 142(6)(a) of the CGST Act, which applications were received on 08.07.2019. 11. However, Shakti Pumps received a letter dated 13.08.2019 from the Assistant Commissioner seeking explanation as to why Input Tax Credit [ITC] of CVD and SAD was not taken by Shakti Pumps by filing Form GST TRAN-1. Shakti Pumps submitted an explanation by a letter dated 05.09.2019. 12. A show cause notice dated 17.09.2019 was then issued to Shakti Pumps proposing to reject the refund claim on the grounds that it could not be claimed under section 142(3) of the CGST Act; the payment of CVD and SAD was made suo moto by Shakti Pumps on various dates after 01.07.2017 and so section 142(6)(a) of the CGST Act would not be applicable; as the payment of CVD and SAD was made on various dates after 01.07.2017 suo-moto and not pursuant to any assessment or adjudication proceedings under the erstwhile law, section 142(8)(b) of the CGST Act would not be appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the enjoyment of the benefit cannot be permitted to enjoy the benefit even after violating the conditions subject to which the benefit was extended. In this connection reliance has been placed on the judgement of the Delhi High Court in Rai Agro Industries Ltd. vs. Director General of Foreign Trade [ 2006 (206) E.L.T. 123 (Del.) ] ; (iii) Section 142(6)(a) of the CGST Act relates to claim of CENVAT credit in proceedings relating to appeal, review or reference and as the said provision is not satisfied, the question of grant of refund of the same is illegal and unjustified; (iv) The officer sanctioning the refund cannot sit in judgment or modify the assessment by the assessing officer. Since every Bill of Entry is an assessment by itself, a Bill of Entry can be appealed against, which is not the case here. Therefore, the applicability of section 142(8)(b) has been wrongly invoked by Shakti Pumps for seeking refund, as no proceeding of assessment or adjudication was instituted; (v) Shakti Pumps had not discharged the onus to prove unjust enrichment. The imported goods could not be used for export and were used for domestic production. The duty paid on the inputs shall be presumed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of CVD and SAD paid under the existing law under the provisions of section 142(3) of the CGST Act. 22. In order to appreciate this issue, it would be appropriate to refer to the relevant provisions. 23. The term assessment has been defined in section 2(11) of the CGST Act and it is as follows: 2(11) assessment means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment 24. The term existing law is defined in section 2(48) of the CGST Act and it is as follows: 2(48) existing law means any law, notification, order rule or regulation relating to levy and collection of duty or tax on goods or services or both passed or made before the commencement of this Act by Parliament or any Authority or person having the power to make such law, notification, order, rule or regulation. 25. Chapter XX of the CGST Act deals with Transitional Provisions . It contains, amongst others, sections 139, 140 and 142. 26. Section 139 of the CGST Act, which came into force on 22.06.2017, deals with migration of existing taxpayers . Sub-section (1) of section 139 is reproduced below: 139 (1) On and fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forward under this Act. ***** (6) (a) every proceeding of appeal, review or reference relating to a claim for CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law, and any amount of credit found to be admissible to the claimant shall be refunded to him in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 (1 of 1944) and the amount rejected, if any, shall not be admissible as input tax credit under this Act: Provided that 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 this Act; (b) every proceeding of appeal, review or reference relating to recovery of CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law and if any amount of credit becomes recoverable as a result of such appeal, review or reference, the same shall, unless recover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CGST Act provides that save as otherwise provided in this Act, Chapter V of the Finance Act shall be omitted. Section 174(1) of the CGST Act further provides that save as otherwise provided in this Act, on and from the date of commencement of this Act i.e. 01.07.2017, the Excise Act and some other Acts referred to are repealed. 32. It is in the light of the aforesaid factual and legal position that the contentions that have been advanced by the learned authorised representative appearing for the department and the learned counsel appearing for the respondent have to be considered. 33. It is not in dispute that Shakti Pumps could not fulfil the export obligations within the time specified in AA and it suo-moto discharged the payment of duty and the appropriate CVD and SAD with interest after 01.07.2017, on which date the CGST Act was implemented. In terms of the 2004 Credit Rules, as applicable prior to 01.07.2017, Shakti Pumps was entitled to claim CENVAT credit of CVD and SAD paid on imports. In response to the query sought by the Assistant Commissioner in the letter dated 30.08.2019 Shakti Pumps explained that out of the thirteen payments of CVD and SAD through GAR-7 challan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of human error it could not be done. It is for this reason that the appellant had filed two applications under sub-section (3) of the section 142 of the CGST Act, which applications were rejected and the appeal filed by the appellant before the Commissioner (Appeals) was also rejected. 37. It would be pertinent to reproduce the relevant portions of the application dated 21.06.2019 submitted by Shakti Pumps to the Assistant Commissioner for cash refund of CENVAT credit amounting to 1,35,10,358/- and the same is reproduced below: 3. Due to some technical reasons certain import items imported under the aforesaid Advance Authorisation, without payment of Customs Duty, was not consumed fully, for export of Solar Pump Controller and Submersible Motors , within specified period of Advance Authorisation. xxxxxxxxxx 5. Since there was shortfall in fulfilment of Export Obligation under the aforesaid Advance Licences Balance due to which balance quantity of Solar Pump Drive, DCMCB, Stainless Steel Sheet/Coils and CRNGO which was not utilised (imported in excess), we had paid CVD SAD of Rs. 1,35,10,358.00/- paid by us, vide the above mentioned Challans. 6. We can apply for Refund of CENVAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment submitted that CVD and SAD are duties which were not paid by Shakti Pumps under the existing law as they were paid because Shakti Pumps failed to fulfil the export obligation within the time specified in the AA s. 41. It is not possible to accept this contention. In the normal course, Shakti Pumps, would have had to pay CVD and SAD on import of the raw materials and components and it is only because of the AA Scheme that allows for duty free import of inputs that are physically incorporated in the exported goods that Shakti Pumps did not pay CVD and SAD. It is on account of non-fulfilment of the export obligation specified in AA that Shakti Pumps was required to pay CVD and SAD with interest. CVD and SAD are obviously paid under the Tariff Act and collected under the Customs Act and the AA authorisation merely provided that in case the conditions are not satisfied, CVD and SAD, which otherwise were required to be paid, had to deposited with interest. Learned authorised representative, therefore, is not justified in contending that CVD and SAD were not paid under the existing law. 42. Learned authorised representative also submitted that CENVAT credit could be availed only if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcise of our equitable jurisdiction. It is trite that one who seeks equity must do equity. The petitioner having failed to discharge its part of the obligation despite the assurance and undertaking furnished cannot be granted any relief in the equitable jurisdiction of this court. (emphasis supplied) 45. The second aspect, the High Court observed was regarding the chargeability of interest on duty which was payable but was not paid in view of the exemption granted subject to fulfilment of the conditions prescribed in such exemption. In regard to the second aspect, the High Court observed as follows: 17. xxxxxxxxxx. But for the exemption from payment of duty under the EPCG scheme, the petitioner would have been liable to pay the duty at the rate stipulated for the imports made by it. A concessional rate was, however, applied to the said imports subject to the petitioner's satisfying the requirements stipulated for the said benefit. No sooner it is found that the petitioner has failed to perform its export obligation which was one of the conditions for applying a concessional rate of duty, the exemption would cease to be effective and the liability to pay the duty at the rate ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 14 and wrongly read it down without properly appreciating the scope and limitation thereof. xxxxxxxxxx. 18. We do not feel that any other harmonious construction is required to be given to the aforesaid expression/provision which is clear and unambiguous as it exists all by itself. So far as Section 11AB is concerned, the same becomes relevant and applicable for the purpose of making recovery of the amount due and payable. Therefore, the High Court erroneously held that interest cannot be claimed from the date of wrong availment of CENVAT credit and that it should only be payable from the date when CENVAT credit is wrongly utilized. xxxxxxxxxxx. 19. 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. xxxxxxxxxxxx (emphasis supplied) 49. The said decision of the Supreme Court in Ind-Swift Laboratories would not be applicable in the present case. This decision merely holds that rule 14 of the 2004 Credit Rules cannot be read down and that interest can be claimed from the date of wrong availment of CENVAT credit. In the instant case, as noticed above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CGST Act in respect of CENVAT credit would be applicable only when CENVAT credit was taken prior to 30.06.2017. 56. Section 142(3) of the CGST Act does not contain such a stipulation. 57. This issue was examined by a Larger Bench of the Tribunal in M/s. B M/s. Bosch Electrical Drive India Private Limited vs. Commissioner of Central Tax, Chennai [ 2023 (12) TMI 1145 - CESTAT Chennai ] and the relevant portion of the order of the Larger Bench is reproduced below: 8. The Deputy Commissioner, by order dated 24.04.2019, rejected the refund claim filed by the appellant for the reason that after the implementation of CGST Act on 01.07.2017, the CENVAT Rules ceased to be in force and the claim under section 142(3) of CGST Act cannot be considered to be under the existing law as the service tax was not paid in time but on 08.12.2017 after the CGST Act had come into force. xxxxxxxxxxx 16. In the present case, the appellant had deposited the short payment of service tax under the reverse charge mechanism in respect of import of service on 08.12.2017, after the time period prescribed for filing the last ST-3 Return had expired. This amount was, therefore, not reflected in the ST-3 Return. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Larger Bench of the Tribunal in Bosch Electrical , the said decision does not lay down the correct law. 60. Learned authorised representative appearing for the department has also placed reliance on the decision rendered by a learned Member of the Tribunal in Servo Packaging Ltd. vs. Commr. of GST and C. Ex., Puducherry [ 2020 (373) E.L.T. 550 (Tri.- Chennai) ] . The relevant portion of the decision is reproduced below: 2. Brief facts leading to the present controversy are, the assessee made a request for refund of the Customs Duty paid, due to unfulfilled export obligation against Advance Authorization, under Section 142(3) of the CGST Act, 2017. The assessee-appellant could not fulfil its export obligation in some cases, as per annexure to its request for refund dated 16-5-2019, owing to lack of export orders, which prompted the appellant to pay off the Customs Duties on account of short export and thereby close the export obligation under the above Advance Licences. It is also an admitted fact that the above Customs Duty was paid along with appropriate interest. It is the case of the appellant that since the inputs imported by it were used in the manufacture of final products o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision is clearly contrary to the view expressed by the Larger Bench of the Tribunal in Bosch Electrical . 62. Learned counsel for Shakti Pumps has, however, placed reliance upon the several Division Bench decisions of the Tribunal wherein refund of CENVAT credit in cash has been granted. 63. In Granules India Ltd. vs. Commissioner of Central Tax Hyderabad [ 2024 (2) TMI 1375 CESTAT Hyderabad ] , the Division Bench after placing reliance upon the Larger Bench decision of the Tribunal in Bosch Electrical held: 12. Having considered the rival contentions, we find that the payment of CVD and SAD subsequently during the GST regime, for the imports made under advance authorisation prior to 30.06.2017 is not disputed. It is also not disputed that the Appellant have paid the CVD and SAD during the period August 2018 to March 2019, by way of regularisation of the shortfall in fulfilment of export obligation. We find that Section 142(3) read with 142(5) of the GST act, provides that every claim for refund by any person before, on or after the appointed day, for refund of any amount of Cenvat credit/duty/tax/interest or any other amount paid under the existing law, shall be disposed of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cenvatable at the time when the said duty was payable, It is clearly eligible for refund under Section 11B read with Section 142(3) of CGST Act, 2017. Therefore, in our considered view, the appellant are legally entitled for the refund of CVD/ SAD. As regard the judgments relied upon by the appellant as well as the Revenue, we find that the Revenue has filed the appeal on the sole ground that the adjudicating authority has rejected the claim relying on the Single Member Bench decision in the case of this Tribunal decision in the case of Sarvo Packaging Ltd. There are number of judgments by this Tribunal itself which are contrary to the decision of Sarvo Packaging Limited 2020 (373) ELT 550 (Tri. Chennai). Moreover, even after considering the Sarvo Packaging Limited decision (supra), the Tribunal s Single Member Bench in the case of Sri Chakra Polyplast India Private Limited (supra) after relying upon many other decision came to the conclusion that the appellant are entitled for the refund under Section 142(3) of CGST Act, therefore, the decision of Sarvo Packaging Limited stand departed. xxxxxxxxxx. (emphasis supplied) 65. The same view was also taken by the Tribunal in (1) Kobe Su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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