2022 (11) TMI 1090 - AT - Central Excise

Tribunal grants manufacturer refund under CGST Act, waives limitation, emphasizes GST credit reversal

The Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the lower authorities' rejection of the refund claims for the cenvat ... Refund of accumulated Credit - transition to GST regime - whether under Transitory Provisions Section 142(3) of CGST Act, refund is not available of the amount of credit, which has been transited to GST Regime under the provisions of the erstwhile Central Excise Act? - principles of natural justice - HELD THAT:- Admittedly, Save and Except taking forward of the credit balance as on 30.06.2017, the appellant have not commenced production or manufacturing activities nor cleared any taxable goods on or after 1.7.2017. Further, debit by the appellant in the electronic ledger (DRC-3) amounts to reversal of credit transferred to GST regime - the appellant is entitled to refund under the provisions of Section 142(3) of CGST Act, which provides that assessee can file refund claim on or after the appointed day, for refund of any amount of credit of duty, etc. paid under the existing law (Central Excise/Service Tax), subject to clearing the bar of unjust enrichment. Further, the bar of limitation has been waived under Section 142 (3). In the facts of the present case, the appellant is entitled to refund in terms of Section 142(3) read with Section 54 read with Section 49(6) of the CGST Act - in the facts of the present case as the credit has been accumulated due to clearance of excisable goods, during the Excise Law Regime for export, the bar of unjust enrichment is not attracted. Appeal allowed - decided in favor of appellant. Issues:1. Rejection of refund claim of the appellant regarding cenvat credit balance as on 30.06.20172. Application of Rule 5 of CCR and Notification No.27/20123. Compliance with Section 142(3) of the CGST Act4. Onus of unjust enrichmentAnalysis:The appellant, a manufacturer of Sheet Metal Components, had accumulated cenvat credit balance as on 30.06.2017 due to mostly clearing goods for export under bond. The appellant migrated to the GST regime and filed for a refund of the cenvat credit balance. The refund claims were rejected by the lower authorities citing various grounds, including non-compliance with Notification No.27/2012 and the proviso to Section 142(3) of the CGST Act.The Commissioner (Appeals) upheld the rejection, emphasizing that the refund was not allowable as per the proviso to Section 142(3) of the CGST Act and due to failure to file the refund claim within the prescribed period. The appellant was also unable to provide essential documents supporting export clearance and unjust enrichment compliance, leading to the rejection of the refund claims.The appellant contended that the closure of the factory and the decision not to restart production entitled them to a refund, citing relevant case law supporting their position. The appellant also argued that under Section 54 of the CGST Act, they were entitled to a refund of the accumulated credit, as evidenced by debiting the amount in the Electronic Credit Register (DRC-03).The Tribunal, after considering the arguments, found that the appellant, apart from carrying forward the credit balance, had not resumed production or cleared taxable goods post-GST implementation. The Tribunal noted that the appellant's debiting of the amount in the electronic ledger constituted a reversal of credit transferred to the GST regime. The Tribunal held that the appellant was entitled to a refund under Section 142(3) of the CGST Act, subject to clearing the bar of unjust enrichment.The Tribunal waived the bar of limitation under Section 142(3) and ruled in favor of the appellant, allowing the appeal and setting aside the impugned order. The Adjudicating Authority was directed to grant the refund within 60 days from the date of the order, along with applicable interest as per rules.