2022 (3) TMI 748 - AT - Central Excise

Tribunal Orders Refunds of Special Duty & Countervailing Duty, Correcting Previous Court Error

The Tribunal allowed the appeals, directing the Assistant Commissioner to grant refunds of Special Additional Duty (SAD) and Countervailing Duty (CVD) ... Refund under Section 142(3) and (6) of the CGST Act - CENVAT credit not available under GST regime - regularisation of advance licence imports - Advance Authorisation scheme - interest under Section 11BB of the Central Excise ActRefund under Section 142(3) and (6) of the CGST Act - CENVAT credit not available under GST regime - regularisation of advance licence imports - Advance Authorisation scheme - interest under Section 11BB of the Central Excise Act - Whether refund of CVD and SAD paid for regularisation of Advance Licence imports (imports made prior to 30.06.2017) after implementation of GST is allowable where CENVAT credit is no longer available under GST. - HELD THAT: - The Tribunal found that the inputs were imported under the Advance Authorisation scheme prior to 30.06.2017 and that the appellant subsequently paid CVD and SAD in May 2018 and May 2019 for regularisation on being pointed out by the Revenue. Since CENVAT credit of such duties is not available under the GST regime w.e.f. 01.07.2017, but was available under the erstwhile Central Excise regime, the amounts paid for regularisation do not become ineligible merely because credit cannot now be availed under GST. The Tribunal held that the lower authority erred in requiring production of duty-paid invoices showing incorporation of inputs in dutiable final products as a precondition for refund. Applying the provisions conferring refund in the CGST Act, the Tribunal concluded that the appellant is entitled to refund under Section 142(3) and (6) of the CGST Act. The Tribunal further directed payment of interest under Section 11BB of the Central Excise Act and mandated grant of refund within a specified period, thereby setting aside the impugned orders. [Paras 7, 8]Refund of the CVD and SAD paid for regularisation of Advance Licence imports (payments made in May, 2018 and May, 2019) is allowable under Section 142(3) and (6) of the CGST Act; the impugned orders are set aside and the jurisdictional Assistant Commissioner is directed to grant refunds with interest under Section 11BB of the Central Excise Act within 45 days.Final Conclusion: Appeals allowed; refunds of the CVD and SAD paid on regularisation of Advance Licence imports (made prior to 30.06.2017) are to be granted with interest, and the impugned orders are set aside. Issues:Refund rejection on CVD + SAD paid for regularisation of advance licence post-GST implementation.Analysis:The appellant, engaged in manufacturing, imported inputs without payment of Customs duty against an Advance Licence. Upon failure to fulfill export obligations, they paid Customs duties post-GST implementation. The issue was whether they could claim cenvat credit of CVD and SAD. Show cause notices were issued proposing refund rejection, citing inadmissibility of credit under CGST Act. The Court below rejected the refund claims.The appellant appealed to the Commissioner (Appeals), who noted that Cenvat Credit Rules allow credit of CVD and SAD paid under the Customs Tariff Act but observed that post-GST implementation, such credit couldn't be availed. Import under advance authorisation was conditional, and availing credit upon failure would defeat the purpose. Thus, the refund claims were rejected.The Tribunal heard the parties and reviewed the case. It acknowledged the payment of CVD and SAD post-GST for imports made pre-GST under the advance authorisation scheme. The Court below erred in demanding detailed records for refund approval. As credit was no longer available under GST but was under the previous Central Excise regime, the Tribunal held the appellant entitled to a refund under CGST Act provisions.Consequently, the Tribunal directed the Assistant Commissioner to grant refunds of SAD & CVD within 45 days with interest under the Central Excise Act. The impugned orders were set aside, and both appeals were allowed.