2024 (1) TMI 1272 - AT - Central Excise

Customs duty refund allowed after nine years despite non-fulfilment of export obligation under CENVAT Credit rules

Sri Chakra Poly Plast India Pvt Ltd Versus Commissioner of Central Tax Hyderabad,

CESTAT Hyderabad allowed appellant's appeal for cash refund of differential customs duty (basic customs duty + CVD + SAD) paid after nine years due to ... Seeking refund in cash as CENVAT Credit cannot be utilized - entire amount of differential customs duty (basic customs duty + CVD + SAD) has been paid by the appellant after about nine years after the initial date of imports, on account of non-fulfilment of Export obligation - whether CVD+SAD as part of Custom Duties paid subsequent to 01.07.2017 on account of non-fulfilment of Export Obligation, are eligible for cash refund when the Appellant cannot take these amounts as Cenvat Credit? HELD THAT:- In the case of OSI SYSTEMS PVT LTD VERSUS COMMISSIONER OF CENTRAL TAX RANGAREDDY - GST [2022 (9) TMI 801 - CESTAT HYDERABAD], this Bench while dealing the issue as to whether the Service Tax paid on RCM basis subsequent to 01.07.2017, which otherwise is eligible as Cenvat Credit, can be taken as cash refund u/s 142(3) of CGST Act, 2017 was considered and has held 'no unjust enrichment is attracted as the appellant have admittedly paid service tax in August, 2018 out of their own pocket.' - the above case law is also squarely applicable to the facts of the present case. Admittedly, the Department was not aggrieved by the Order-in-Original passed and no further appeal was preferred by the Department before Commissioner (Appeals). Further, there are force with the appellant’s arguments that the entire amount in question was paid almost after nine years from the date of imports. Therefore even on hypothetical basis there would be no possibility of the appellant passing on the customs duty burden on any other party. Therefore, the Revenue arguments on this issue is rejected. The impugned order is set aside - Adjudicating Authority is directed to grant the refund along with interest, which is to be calculated from the initial date of filing the refund claim - appeal allowed. Issues Involved:1. Eligibility of refund claim under Sec.142(3) of the CGST Act, 2017 for CVD+SAD paid post-GST implementation.2. Jurisdiction of the Tribunal to entertain appeals against orders passed under Sec.142(3) of the CGST Act.3. Applicability of the Unjust Enrichment clause under Section 11B(2) of the CEA, 1944.Summary:1. Eligibility of Refund Claim:The Appellant, M/s Sri Chakra Poly Plast India Pvt Ltd., could not fulfill the export obligation for capital goods procured under an EPCG License and paid the Customs Duty, including CVD+SAD, amounting to Rs.12,30,146/-. Since this payment was made under the GST regime, they could not avail Cenvat Credit and filed a refund claim under Sec.142(3) of the CGST Act, 2017. The Lower Authorities dismissed this claim, leading the Appellant to approach the Tribunal.2. Jurisdiction of the Tribunal:The Larger Bench in the case of Bosch Electrical Drive India Pvt Ltd concluded that appeals against orders passed under Sec.142(3) of the CGST Act lie with the Tribunal. It was clarified that claims for refund after 01.07.2017 must be disposed of under the existing law, i.e., Chapter V of the Finance Act and the Central Excise Act, thus affirming the Tribunal's jurisdiction.3. Applicability of the Unjust Enrichment Clause:The Adjudicating Authority initially rejected the refund claim citing that Sec.142(3) of the CGST Act does not apply as the duties paid were not eligible for Cenvat Credit under the existing law. The Tribunal, however, noted that the clause of unjust enrichment does not apply since the payment was made almost nine years after the initial imports, making it impossible for the duty burden to be passed on.Case Laws Referenced:- Mithila Drugs Pvt Ltd vs CGST, Udaipur- Clariant Chemicals India Ltd vs CCE & ST, Raigad- ITCO Industries Ltd vs CGST & CE, Salem- Flexi Caps & Polymers Pvt Ltd vs CGST & CE, Indore- OSI Systems Pvt Ltd vs CCT, RangareddyConclusion:The Tribunal, following the precedents set by various co-ordinate Benches, held that the Appellant is eligible for a cash refund of the CVD+SAD paid post-GST implementation, under Sec.142(3) of the CGST Act. The Tribunal set aside the impugned order and directed the Adjudicating Authority to grant the refund along with interest from the initial date of filing the refund claim.