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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. X X X X Extracts X X X X X X X X Extracts X X X X ..... leviable, but for the 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 import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps before the Assistant Commissioner seeking 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaking that it shall perform certain acts necessary for 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 dom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to whether Shakti Pumps was entitled to claim refund of CENVAT credit in cash on the amount 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 22.06.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided further 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. ***** (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 accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s received. Under rule 9(1)(e) of the CENVAT Rules, credit can be taken on the basis of a challan evidencing payment of service tax, by the service recipient as the person liable to pay service tax. Section 173 of 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve taken in his electronic credit ledger the amount of the CENVAT credit under section 140(1) of the CGST Act because the service tax return had been filed before the deposit of the service tax, except in two cases where because 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Shakti Pumps that pursuant to the order passed by the Commissioner (Appeals), the sanctioning officer verified the condition of unjust enrichment and sanctioned refund by order dated 30.12.2020. 40. Learned authorised representative appearing for the department 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equity in favour of a person who has availed of a benefit but failed to perform the obligation subject to which alone it could take such benefit. If that be so, as it indeed is, we see no reason why this court should come to the rescue of a party who fails to do equity in exercise 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules 3 & 4 of the Credit Rules proceeded to hold that interest cannot be claimed from the date of wrong availment of CENVAT credit and that the interest would be payable from the date CENVAT credit is wrongly utilized. In our considered opinion, the High Court misread and misinterpreted the aforesaid 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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end that Shakti Pumps had not complied with the provisions of the 2004 Credit Rules. Even otherwise, the adjudicating authority had also not questioned this aspect as has been noticed by the Commissioner (Appeals). 55. Learned authorised representative also submitted that the transitional provisions under section 142 of the 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to take the TRAN-1 route etc., within specified time. xxxxxxxx." 59. Even though this decision was rendered on 30.04.2024 after the Larger Bench of the Tribunal in Bosch Electrical had answered the reference on 21.12.2023, but it appears that the order of the Larger Bench of the Tribunal was not placed before the learned Member. In view of the order of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... At best, the appellant could have availed the Cenvat credit, but that would not ipso facto give them any right to claim refund of such credit in cash with the onset of GST because CENVAT is an option available to an assessee to be exercised and the same cannot be enforced by the CESTAT at this stage." (emphasis supplied) 61. The view taken by the learned Member in this 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST regime from 01.07.2017 refund provision was enacted which specifically deals with the situation of refund of amount which is cenvatable as per existing law i.e. Central Excise Act, 1944 and Rules made thereunder. In the present case, the refund was made under the existing law i.e. section 11B of Central Excise Act, 1944 accordingly, the refund of SAD/CVD paid by the appellant which was 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 ..... 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