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TMI Blog2025 (2) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 also on record, that there is no dispute with respect to fulfillment of unjust enrichment angle in the case of the present refund, as the authorities below have not raised any objection with respect to these. Further, the appellants have also submitted that the amount claimed as refund has not been passed to any other person and the amount of Rs.25,52,385/- reversed has been shown in their books of accounts and the return filed with the department. 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 transitiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he scrutiny of law. Therefore, by setting aside the impugned order dated 18.11.2020, the appeal is allowed in favour of the appellants, with consequential relief, with respect to refund of excess CENVAT credit of Rs.25,52,385/- payable to the appellants.
Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... as 'CENVAT Credit' under Section 140(1) of the CGST Act, 2017 would not include the credit of Krish Kalyan Cess and therefore, credit of Krish Kalyan Cess was not admissible under the CGST Act, 2017.....From the above, it is observed that nowhere in the provisions of Rule 5 it provides for refund of any amount of Cenvat credit lying in balance or lying unutilized except in case of export of services, in the absence of any such provisions for refund of Krish Kalyan Cess lying in balance as on 30.06.2017 is therefore liable to be rejected..... 9. In view of above findings and following judicial discipline, I hold that the Appellant are not eligible to carry forward and set off of unutilized Krish Kalyan Cess with reference to Section 140 of the CGST Act, 2017 and therefore, they are not entitled to the refund of the same as per provisions of Section 11B of the Central Excise Act, 1944." 2.5 Being aggrieved with the above Order-in-Appeal dated 18.11.2020being the impugned order herein, the appellants have filed this appeal before the Tribunal. 3.1 Learned Advocate appearing for the appellants had submitted that they had closing balance of education Cess and Secondary Higher Edu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VAT Credit Rules. With advent of GST, closing balance as on 30.06.2017, the appellants had an unutilized credit of Education Cess & Secondary Higher Education Cess of Rs. Rs.25,52,385/-as evidenced from ST-3 return for the of JuneSeptember, 2017. He further submitted that the refund cannot be denied on the allegation that there was no provision under Rule 5 of CCR, 2004 or CEA, 1944 for refund of unutilized CENVAT credit except Notification No. 27/2012-CE(NT) dated 18.06.2012. He further stated that it is pertinent to note that Section 142(9)(b) of CGST Act, 2017 squarely covers the refund application of the appellants wherein refund is sought for such amount of Cenvat credit which has been accrued additionally as a result of the revision of Service Tax return (ST-3). 3.4 In this regard, he cited the judgement of Hon'ble Supreme Court in the case of Eicher Motors (2002-TIOL-149-SC-CX-LB) and in Samtel India Ltd. (2003-TIOL-40-SC-CX) wherein it had been held that credit earned is vested right. In the cited case, he stated that the KKC credit is vested right which has been validly been earned by appellants and such right cannot be taken away with change in law unless specific pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections (3) and (9) of Section 142of the CGST Act, 2017 read with Section 11B of the Central Excise Act, 1944? 5.1 In order to appreciate the issues under dispute, the specific legal provisions of the CGST Act, 2017, Central Excise Act, 1944 and CENVAT Credit Rules, 2004 (CCR) relevant to the dispute are extracted and herein given below for ease of reference: Central Goods and Services Tax Act, 2017 "Miscellaneous transitional provisions. Section 142. (1) Where any goods on which duty, if any, had been paid under the existing law at the time of removal thereof, not being earlier than six months prior to the appointed day, are returned to any place of business on or after the appointed day, the registered person shall be eligible for refund of the duty paid under the existing law where such goods are returned by a person, other than a registered person, to the said place of business within a period of six months from the appointed day and such goods are identifiable to the satisfaction of the proper officer: Provided that if the said goods are returned by a registered person, the return of such goods shall be deemed to be a supply. xxx &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Additional Duties of Excise (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, by notification in the Official Gazette, specify:....." 5.2 Before I proceed with the present case in hand, the competency of the Tribunal in 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 are 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 sub-section (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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 also on record, that there is no dispute with respect to fulfillment of unjust enrichment angle in the case of the present refund, as the authorities below have not raised any objection with respect to these. Further, the appellants have also submitted that the amount claimed as refund has not been passed to any other person and the amount of Rs.25,52,385/- reversed has been shown in their books of accounts and the return filed with the department. 8.1 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scading and distortionary tax on production resulting in mis-allocation of resources and lower productivity and economic growth. It had also inhibited voluntary compliance. Therefore, it was necessary to replace the existing indirect tax system by a new regime which would foster the achievement of the following objectives viz., (a) The incidence of tax falls only on domestic consumption; (b) The efficiency and equity of the system is optimized; (c) There should be no export of taxes across taxing jurisdictions; (d) The Indian market should be integrated into a single common market; (e) It enhances the cause of cooperative federalism. Accordingly, 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 Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to new GST regime, and the same is not proper and therefore denial of cash refund solely on the basis that there exists no provision under CENVAT statue for cash refund, is not legally sustainable. 9.5 I further find support for my above observations about the basis of CENVAT as input tax neutralisation scheme from the following judgements of the Hon'ble Supreme Court. The object of the input credit scheme had been explained by the Hon'ble Supreme Court in the case of CCE Vs. Dai Ichi Karkaria Ltd. 1999 (112) E.L.T. 353 (S.C.) as follows: "17. It is clear from these Rules, as we read them, that a manufacturer obtains credit for the excise duty 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easonable 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 Central Government for smooth implementation of transfer to GST regime in indirect taxation, I find that the provisions of Section 142 of the CGST Act, 2017 are sufficient to provide for the tax administration for sanction of cash refund in circumstances stated therein, and I find that there is no need and it is not legally feasible to make any specific provision in CENVAT statute itself, for enabling 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 Clar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t can't avail dual benefits once order of this Tribunal is duly complied by the Respondent Department by the closing date of the window. THE ORDER 10. The appeal is allowed and the order passed by the Commissioner of Central Tax, Central Excise & Service Tax (Appeals), Raigarh vide Order-in-Appeal No. MKK/466/RGD APP/2018-19 dated 07.02.2019 is hereby set aside and the Appellant is eligible to get refund of Rs.11,04,057/- paid against CVD and SAD which applicable interest, if any, within a period of two months of communication of this order." 10.2 The relevant paragraphs in the Final Order No. 42467/2021 dated 16.12.2021 in the case of M/s Circular Flow Technologies India Pvt. 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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. Further I find that the appellant had already debited the entire amount in their Cenvat account and the said amount was debited under a bona fide belief that the cash refund would be sanctioned to them and the very fact that Cenvat credit was never disallowed, hence the Cenvat credit lying 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the SCN, but refund arising on account of the excess CENVAT credit paid by the appellants, which is in excess of the CENVAT credit that is required to be paid in terms of the Rule 6(3A) of the CCR and specifically allowed to be adjusted in terms of clause (f) of Rule 6(3A) of the CCR. Secondly, the transition provisions referred to therein are regarding credit earned by a manufacturer under the CENVAT Credit Rules, 2002 and how they will be allowed to be utilised in accordance with CENVAT Credit Rules, 2004. In the present case, the existing indirect tax law relating to levy of Central Excise duty i.e., Central Excise Act, 1944 has 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is fully or partially rejected, the amount so rejected shall lapse: Provided 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. ********************************" 11. In our view, Section 142(3) of the Act is very clear in as much as, it says " every claim for refund filed 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 .............. and any amount eventually accruing ........ shall be paid in cash ......". It is very widely worded in as much as it uses 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 ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cement (supra), have held that rejection of refund of accumulated balance amount of credit on education cess, secondary and higher education cess and Krishi Kalian cess by original authority and upheld by the Commissioner (Appeals-Thane) cannot be legally sustained and set aside the impugned order of rejecting the appeal filed by the appellants in that case. 10.8 In this regard, I find that Hon'ble Supreme Court have held in the case of Union of India Vs. Kamlakshi Finance Corporation Limited - 1991 (55) E.L.T. 433 (S.C.) that judicial discipline is required to be followed in proper administration of tax laws. The relevant paragraph of the said order is as follows: "6........The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to the department - in itself an objectionable phrase - and is the subject-matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent Court. If this healthy rule is not followed, the result will only be undue harass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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