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TMI Blog2025 (2) TMI 1173X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Central Excise duty on such manufactured final products and for compliance with the Central Excise statute they are registered with jurisdictional Central Excise authorities and are holding Central Excise Registration No. AABCO5420AEM001. The appellants avail CENVAT credit of duty/tax on inputs and input services used in provision of output services. The appellants have filed a refund application in the prescribed Form-R dated 29.06.2020for refund of Rs. 4,82,561/- being the closing balance of Education Cess and Secondary & Higher education cess lying as on 30.06.2017, which could not be transitioned as input credit under GST regime, on various grounds mentioned in their refund application. The said amount was initially carried forward by the appellants as transition credit under GST regime by filing TRAN-1 and also reflected in the ER-1 return filed for the period June, 2017. Subsequently, upon receiving a notice from the department on 10.07.2019 objecting to transitioning of such credit and that the same is not permissible in GST regime, the appellants had reversed the credit of Rs. 4,82,561/- by submitting revised GSTR-3B for July, 2019. The appellants in support of their c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in Section 140 of the CGST Act 2017 does not apply to carry forward of CENVAT credit under Section 140(1) of the CGST Act 2017. Thus, in terms of Section 140(1), the appellants are allowed to transfer the closing balance of CENVAT credit as on 30.06.2017 to GST regime through filing of TRAN-1 form. As per CENVAT Rules, the eligible CENVAT credit to be transitioned covered EC, SHEC and KKC. Accordingly, in the Form TRAN-1, the appellants had included the amount of KKC in the amount of Cenvat credit to be transferred. However, subsequently vide CGST (Amendment) Act, 2018, Section 140(1) of the CGST Act was amended retrospectively with effect from 1st July 2017. Further circular dated 02.01.2019 clarified that in terms of amendment in section 140(1) of CGST Act, 2017 transition of cess credit is not allowed in the GST regime. Even after this amendment, the appellants were of the view that they are entitled for the transition of the credit of KKC. However, as an abundant caution, the appellants had reversed the credit of Rs. 4,82,561/- transitioned vide GST Form TRAN-1 pertaining to credit of KKC and also revised the returns vide GSTR-3B for July, 2019. 3.3 Learned Counsel further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 140 of the CGST Act) and 'CENVAT Credit' (term employed in Section 142 (3) of the CGST Act); which difference was also noted by the Hon'ble Madras High Court both by the single member and the Division bench. 3.6 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 provision which would debar from refund. 3.7 Further, learned Counsel also relied on the decision of the Tribunal in the case of Bharat Heavy Electricals Ltd (2020-TIOL- 1341-CESTAT-DEL) wherein it was held that Education Cess and Secondary & Higher Education Cess cannot be transferred to GST account and as they were lying unutilized in their CENVAT credit account on 30.06.2017, the appellant in that case was held to be entitled to claim the refund thereof. He also cited the order of the Tribunal in the case of Emami Cement Ltd (2022-TIOL-280- CESTAT D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulation 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; 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 xxx & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsection (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. Repeal and saving. Section 174. (1) Save as otherwise provided in this Act, on and from the date of commencement of this Act, the Central Excise Act, 1944 (1 of 1944) (except as respects goods included in entry 84 of the Union List of the Seventh Schedule to the Constitution), the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955), the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id by the manufacturer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (e) the duty of excise and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (f) the duty of excise and interest, if any, paid on such duty] borne by any other such class of applicants as the Central Government may, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of amount paid under Central Excise Act, 1944. Further, there is no provision under the CGST Act, 2017 for refund of any cess. 8. The relevant portion of the original order n the above aspect for ease of reference, is extracted and given below: "15. The basic issue in the present refund claim is whether the Education Cess & Secondary Higher Education Cesses, which is lying in the Cenvat Credit account of M/s Orient Cement Ltd. can be refunded to the claimant. As seen in the forgoing paras, due to insertion of Section 28 of CGST (Amendment) Act, 2018 which amended Section 140(1) of CGST Act 2017,the claimant had to reverse the amount of Rs. 482561/- which was claimed in Tran 1. Hence amount of Rs 482561/- were lying in the Cenvat Credit account of claimant for the month of June 2017. Now the question arises whether there is any provision in the CGST Act 2017,which enables the claimant to get refund of 482561/- lying in the Cenvat account. xxx xxx &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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. 10.1 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 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 cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ystem 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 Excise duty, Service Tax, VAT, Purchase Tax, Central Sales Tax, Entry Tax, Local Body Taxes, Octroi, Luxury Tax, etc. 11.3 It is also expected that GST will also make India's exports more competitive and also provide a level playing field to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bservations 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 12.1 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rh 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." 12.2 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 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 cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions 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 sub-section (3) and sub-section (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 12.5 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund of CENVAT credit 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra), have held that rejection of refund of accumulated balance amount of credit on education cess, secondary and higher education cess and Krishi kalyan 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. 12.8 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 harassment to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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