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TMI Blog2024 (9) TMI 919X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CCR, for cash refund of excess CENVAT credit and therefore the refund in terms of proviso (c) to Section 11B(2) ibid, is not permissible in the case of the appellants - the provisions of Section 142(9)(b) of the CGST Act, is a transitional arrangement wherein it has been specifically provided that such provisions apply as a non-obstanate clause whereby such provisions will have overriding effect, if anything to the contrary is contained under the provisions of existing law i.e., Central Excise Act, 1944, except for the provisions of sub-section (2) of section 11B ibid. Thus, all the conditions of the requirements of Section 11B ibid as it remained under the existing law, other than those relating to Unjust Enrichment clause contained in Section 11B(2) ibid would apply, only if they are not contradictory to the provisions of Section 142(9)(b) of the CGST Act, 2017, in dealing with refund of CENVAT credit . It is reasonable to conclude that when the Central Excise Act, 1944 amongst other laws relating to old tax regime was repealed by Section 174 of the CGST Act, 2017 and that the CCR is also being superseded vide Notification No.20/2017-C.E. (N.T.) dated 30.06.2017, by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellants had filed original ER-1, a monthly return for production and removal of goods and other relevant particulars including CENVAT credit, for the month of June 2017 on 10.07.2017, indicating admissible CENVAT credit of Central Excise duty and Service Tax. Subsequently, the appellants had filed revised ER-1 for the month of June 2017 on 31.07.2017, indicating admissible CENVAT credit of Central Excise duty and Service Tax for an additional amount of Rs.30,52,536/- on input, capital goods and input services, which were not claimed in earlier prerevised return filed by them. Further, the closing balance of CENVAT Credit in the ER-1 return for June-2017 has been transitioned as CGST credit in terms of Section 140(1) of the CGST Act, 2017 in the month of December 2017 only for an amount of Rs.24,51,34,252/- instead of eligible amount of Rs. 24,81,86,788/. Thus, they claim that the amount of Rs. 30,52,536/- is refundable to them, for which they had initially filed a refund claim application vide their letter dated 05.06.2018 with the office of the Deputy Commissioner, SGST, Mazagaon, Mumbai. Subsequently, they were informed that the SGST office is not the correct jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d order dated 13.01.2020, had rejected such appeal by upholding the order of the original authority as follows: (i) Refund Claim should have been filed in accordance with Section 142(3) of CGST Act and not under 142(9)(b) of the CGST Act; and (ii) Revised FORM GST TRAN-1 was allowed to be filed up to 31 March 2019 as per Rule 120A of Rules, 2017 and the same should have been filed for transition of the CENVAT credit instead of seeking refund of the CENVAT credit under Section 142(9)(b) of the CGST Act. 2.6 Being aggrieved with the above Order-in-Appeal dated 13.01.2020, the appellants have filed this appeal before the Tribunal. 3.1 Learned Advocate appearing for the appellants at the outset, had submitted that the issue of whether this Tribunal has jurisdiction to hear matters pertaining to Section 142(3) /142(9) of the CGST Act has been settled by the Larger Bench in the case of Bosch Electrical Drive India Pot. Ltd. [2023 (12) TMI 1145 - CESTAT Chennai - LB]. Hence, there is no bar for deciding the issue covered in this appeal by the Tribunal. 3.2 Learned Advocate submitted that in the present case, the refund is arising on account of eligible CENVAT credit not transition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evised Central Excise return within time limit. Thus, the appellants should be entitled to claim refund of the CENVAT Credit on the basis of the afore-mentioned provision. Learned Advocate also submits that in the case of additional CENVAT credit found admissible on the basis of revised returns, the law does not envisage transition of such additional credit to the GST regime and provides for cash refund of such credit. 3.5 In this regard, the appellants placed reliance on the following judgments: (i) Punjab National Bank v. Commissioner of Central-Tax, Bangalore North - 2021 (52) G.S.T.L. 421 (Tri.-Bang.) (ii) Commissioner, Central Tax, Goods & Services Tax, Delhi East vs. CH2M Hill (India) Pvt. Limited, Service Tax Appeal No. 51068 of 2022-SM dated 03 June 2022 (iii) Monochem Graphics Pvt. Ltd. v. Commissioner of Central Excise & CGST, Delhi West - 2022 (67) G.S.T.L. 249 (Tri.-Del.) (iv) Commissioner, Central Tax, Goods & Services, Delhi East Vs. CH2M Hill (India) Pvt. Limited - Order dated 03.06.2022 in S.T. Appeal No. 51068 of 2022 3.6 Learned Advocate also submitted in their additional written submission that the jurisdictional Hon'ble Bombay High Court had deli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appointed day, the registered person who had removed or provided such goods or services or both shall issue to the recipient a supplementary invoice or debit note, containing such particulars as may be prescribed, within thirty days of such price revision and for the purposes of this Act such supplementary invoice or debit note shall be deemed to have been issued in respect of an outward supply made under this Act; (b) where, in pursuance of a contract entered into prior to the appointed day, the price of any goods or services or both is revised downwards on or after the appointed day, the registered person who had removed or provided such goods or services or both may issue to the recipient a credit note, containing such particulars as may be prescribed, within thirty days of such price revision and for the purposes of this Act such credit note shall be deemed to have been issued in respect of an outward supply made under this Act: Provided that the registered person shall be allowed to reduce his tax liability on account of issue of the credit note only if the recipient of the credit note has reduced his input tax credit corresponding to such reduction of tax liability. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (Textiles and Textile Articles) Act, 1978 (40 of 1978), and the Central Excise Tariff Act, 1985 (5 of 1986) (hereafter referred to as the repealed Acts) are hereby repealed….." Central Excise Act, 1944 "Claim for refund of duty and interest, if any, paid on such duty. Section 11B. (1) Any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 12A) as the applicant may furnish to establish that the amount of duty of excise and interest, if any, paid on such duty in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person : Provided that where an application for refund has been made before the comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n handling the orders passed under Section 142(2) of the CGST Act, 2017 in appeal before them, has been dealt by the Larger Bench of the Tribunal, and the reference made therein have been clarified in the Interim Order No. 40021/2023 dated 21.12.2023 in the case of Bosch Electrical Drive India Private Limited Vs. Commissioner of Central Tax, Chennai. The relevant paragraphs of the said order is extracted and given below: "48. The Division Bench of the Tribunal, while referring the matter to the Larger Bench had observed in paragraph 14.1 that an appeal would lie under section 112 of the CGST Act to the Appellate Tribunal constituted under the provisions of the CGST Act against an order passed under subsection (3) of section 142 of the CGST Act. As noticed above, an appeal would not lie before the Appellate Tribunal constituted under the provisions of the CGST Act because an appeal lies only against an order passed either under section 107 or section 108 of the CGST Act. 49. In the present case, the service tax was paid under the provisions of Chapter V of the Finance Act and refund was claimed under sub-section (3) of section 142 of the CGST Act, under which the claim was requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 142(9)(b) of the CGST Act, 2017, in dealing with refund of 'CENVAT credit'. It is also on record, that there is no dispute with respect to fulfilment of unjust enrichment angle in the case of the present refund, as nothing contrary has been expressed by the authorities below with respect to eligibility of refund while examining the same. 8.3 Further, upon introduction of GST regime, the transitional arrangements have been provided under Section 142 of CGST Act, to enable the CENVAT credit, if refundable, to be paid in cash to the eligible persons, as there was no way that such excess CENVAT credit could be used by the assessee in payment of tax on output service or duty on final products. I also find that the proviso (c) to Section 11B(2) ibid, cannot be read to state that refund of such excess CENVAT credit has not been provided under Rule 5 of the CCR, as the entire arrangement of refund of excess CENVAT credit is arising as a transitional arrangement by moving from Excise duty/Service Tax regime to GST regime. The stand taken by the Commissioner (Appeals) is also illogical, as when the Central Excise Act, 1944 amongst other laws relating to old tax regime was repealed by Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a limited number of commodities. Though the name suggested by the Jha committee was manufacturing VAT 'Manvat', the government had adopted it is as 'MODVAT'. The Finance Minister in the Budget Speech on the Floor of the Parliament stated as detailed below, thus giving the background material which led to the development of MODVAT scheme. It also explains the intent and purpose of the credit scheme. This it would be gainful to look into some of the paragraphs of such budget speech enunciating the policy of the government on the said the scheme of credit. The extract of the same is given below: SPEECH OF SHRI VISHWANATH PRATAP SINGH MINISTER OF FINANCE INTRODUCING THE BUDGET FOR THE YEAR 1986-87 "Sir, I rise to present the Budget for the year 1986-87. xxx xxx xxx xxx 113. In excise taxation a vexatious question which has been often encountered is the taxation of inputs and the cascading effect of this on the value of the final product. The Long Term Fiscal Policy had stated that the best solution would be to extend the present system of proforma credit to all exciseable commodities with the exception of a few sectors with special problems like petroleum, tobacco and textil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be in force from 1st March, 1986. Manufacturers who fulfil the requirement will be able to avail of proforma credit in respect of the permissible goods which have suffered duty of excise from 1st February, 1986 and are either in the stocks or are received by the manufacturer on or after 1st March, 1986. 119. As stated earlier, the introduction of MODVAT scheme will result in considerable reduction in the cost of final product and, therefore, to retain the collection of excise duties at the earlier level, the rates of duties on the final product have been suitably adjusted. After accounting for the set off, the duty rates have been rounded to the nearest step in the new duty structure. While all care has been taken to work out the incidence of set off benefits, the scheme being a new one, Central Board of Excise and Customs would take corrective steps wherever anomalies are noted." 9.3 In the Union budget of 2000-2001, MODVAT Scheme was the replaced with CENVAT credit scheme which was notified later through Notification No.27/2000-C.E. (N.T.) dated 31.03.2000. Hitherto, both MODVAT rules and CENVAT scheme rules were part of the Central Excise Rules, 1944. The CENVAT Credit R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ts. It had recommended replacing all indirect taxes except the customs duty with value added tax on all goods and services with complete set off in all stages of making of a product. Accordingly, in the Union budget 2006-2007, an announcement was also made of the intention of the government to move in such direction, as follows: Budget 2006-2007 Speech of P. Chidambaram Minister of Finance February 28, 2006 "155. It is my sense that there is a large consensus that the country should move towards a national level Goods and Services Tax (GST) that should be shared between the Centre and the States. I propose that we set April 1, 2010 as the date for introducing GST. World over, goods and services attract the same rate of tax. That is the foundation of a GST. People must get used to the idea of a GST. Hence, we must progressively converge the service tax rate and the CENVAT rate. I propose to take one step this year and increase the service tax rate from 10 per cent to 12 per cent. Let me hasten to add that since service tax paid can be credited against service tax payable or excise duty payable, the net impact will be very small." 9.5 From careful reading of the policy decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly a well-designed 'value added tax' on all Goods and Services (GST) has been introduced as the most elegant method of eliminating distortions and taxing consumption. Under this GST structure, all different stages of production and distribution can be interpreted as a mere tax pass through, and the tax essentially 'sticks' on final consumption within the taxing jurisdiction. It is also of common knowledge that GST subsumes a number of existing indirect taxes which were earlier levied by the Centre and State Governments including Central Excise duty, Service Tax, VAT, Purchase Tax, Central Sales Tax, Entry Tax, Local Body Taxes, Octroi, Luxury Tax, etc. 9.7 It is also expected that GST will also make India's exports more competitive and also provide a level playing field to domestic industry to compete with imports. In the past due to cascading nature of taxes, India's exports carried some embedded taxes, making them less competitive. Similarly, the hidden effect of cascading means that the total tax incidence on domestic industry is not transparent. Under GST regime, the tax incidence will be transparent, enabling full removal of tax burden on exports and full incidence of do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty paid on raw material to be used by him in the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgement thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provision in the Rules which provides for a reversal of the credit by the excise authorities except where it has been illegally or irregularly taken, in which event it stands cancelled or, if utilised, has to be paid for. We are here really concerned with credit that has been validly taken, and its benefit is available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefore, indefeasible. It should also be noted that there is no co-relation of the raw material and the final product; that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng cash refund of excess CENVAT credit relating to earlier regime while moving to the new GST regime. 10.1 I further find that the issue of reversal of excess CENVAT credit under the transitional arrangement as provided under Section 142 of CGST Act, 2017 has already been addressed by the Co-ordinate Bench of the Tribunal in the following cases, and it was held that cash refund of such excess CENVAT credit is permissible. The relevant paragraphs in the Final Order No. A/85964-2022 dated 18.10.2022 in the case of M/s Clariant Chemicals India Limited Vs. Commissioner of Central Excise & Service Tax, Raigad are extracted and given below: "8. Upon hearing the Counsels from both sides and after perusal of the case record, it is apparent that Appellant's eligibility to take credit of the duties paid as CENVAT Credit is undisputable and only because of procedural aberration occurred during transition to GST period, Appellant could not take the credits in its electronic ledger in the GST regime, for which it sought for refund such a contingency is perhaps foreseen by the legislature for which contingent provision is well enumerated in Clause 6(a) of Section 142 of the CGST Act that dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Limited Vs. Principal Commissioner of GST & Central Excise, Coimbatore are extracted and given below: "11. Section 142 (3) of GST Act provides how to deal with claims of refund of service tax of tax and duty / credit under the erstwhile law. It is stated that therein that such claims have to be disposed in accordance with the provisions of existing law and any amount eventually accruing has to be paid in cash. 12. In the present case, there is no allegation that the credit is not eligible to the appellant. It is merely stated that tax has been paid voluntarily and therefore credit is not available under the GST regime. Though credit is not available as Input Tax Credit under GST law, the credit under the erstwhile Cenvat Credit Rules is eligible to the appellant. Such credit has to be processed under Section 142 (3) of GST Act, 2017 and refunded in cash to the assessee. 13. From the discussions made above, the principles laid down in the decisions cited above, I am of the view that rejection of refund claim cannot be justified. The impugned order is set aside. Appeal is allowed with consequential relief, if any." 10.3 In the case of Dhyan Networks and Technologies Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the balance of Cenvat account are liable to be refunded in cash to the appellant as per the provisions of sub-section (3) or sub-section (6)(a) of Section 142 of CGST Act. This issue is no more res integra and has been held in favour of the appellant by various decisions cited supra. Hence, by following the ratio of the said decisions, I am of the considered view that the impugned order denying the cash refund is not sustainable in law and the appellant is entitled to cash refund as per sub-section (3) and subsection (6)(a) of Section 142 of CGST Act. All the three appeals are accordingly allowed." 7. As the appellant has been allowed to take re-credit and is not able to do the same due to the introduction of G.S.T., I am of the view that he has to be given refund of the said amount in cash. From the discussions made above and also following the decision as cited above, I am of the view that the appellant is eligible for refund of the amount of Rs. 2,93,427/-." 10.4 I further find that in the case of Purvi Fabrico & Texturise (P) Ltd. (supra), the Revenue has contended that except in the case of export of goods, in no other case refund of credit is permissible under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been repealed and law relating Service Tax in Chapter V of the Finance Act, 1994 have been suitably amended to pave way for implementation of new GST regime. Hence, I find that the judgement in the case of Gauri Plasticulture P. Ltd. (supra) is not applicable to the present factual matrix of the case. 10.5 Further, I have also gone through the various case laws cited by both sides to support their respective stand. However, I find that the Hon'ble Bombay High Court had an occasion to examine identical issues in a similar matter before them, in the case of Combitic Global Caplet Pvt. Ltd. Vs. Union of India in Writ Petition No.729 of 2021 with W.P. No.1228 of 2021, and being jurisdictionally binding on this Regional Bench of the Tribunal, I would like to be guided by such judgement delivered recently. In the judgement delivered on 10.06.2024, the Hon'ble Bombay High Court have held that Sub-section (3) of Section 142 of the CGST Act very clearly says any amount eventually accruing shall be paid in cash and directed the departmental authorities/sanctioning authority for refunding the amount of duty refundable to the petitioner in cash instead of credit in CENVAT account. The relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the expression "CENVAT credit" and also "any other amount paid". Even if, we take it that petitioner has made voluntary deposit, that amount has to be shown as CENVAT credit in the account of petitioner. In the alternative, it would certainly come under the category "or any other amount paid". Therefore, either way the amount paid by petitioner, admittedly, has to be refunded. In fact, it is also admitted that an amount of Rs.10,48,11,737/- is refundable to petitioner. The credit of refund is the only issue because Mr. Adik, as an officer of this court and in fairness, agreed that Government cannot retain any amount without any authority of law. 12 Sub-Section (3) of Section 142 of the Act very clearly says "any amount eventually accruing shall be paid in cash". In the circumstances, we are of the opinion that respondents ought to have directed the sanctioning authority to refund the amount of duty refundable to petitioner in cash instead of credit in CENVAT account, 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. 13 Therefore, Rule made ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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