CESTAT allows cash refund of CENVAT credit under Section 142(3) for EPCG License non-compliance

The CESTAT Hyderabad allowed the appellant's appeal seeking cash refund of CENVAT credit under Section 142(3) of CGST Act, 2017. The case involved non-fulfilment of export obligation for capital goods procured under EPCG License, resulting in payment of customs duty including CVD and SAD totaling Rs. 2,97,797. Following precedent from M/S Mithila Drugs case, the tribunal held that CVD and SAD refund is allowable since credit is unavailable under GST regime, unlike the previous Central Excise regime. The adjudicating authority was directed to grant refund with interest calculated from the initial filing date.

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Issues Involved:
1. Eligibility for cash refund under Sec.142(3) of CGST Act 2017 for CVD+SAD paid post-GST regime.
2. Jurisdiction of the Tribunal to entertain appeals against orders passed under Sec.142(3) of CGST Act 2017.

Summary:

1. Eligibility for Cash Refund:
The Appellant, M/s Sri Chakra Poly Plast India Pvt Ltd., was unable to fulfil the export obligation for capital goods procured under EPCG License and paid the total Customs Duty of Rs.11,32,417/-, including CVD+SAD of Rs.2,97,797/-. Since this payment was made under the GST regime, the Appellant could not avail Cenvat Credit and filed a refund claim for Rs.2,97,797/-. The Lower Authorities dismissed the refund claim, leading to the appeal before the Tribunal.

The Tribunal considered precedents where similar issues were decided in favor of the Assessees, such as:
- Mithila Drugs Pvt Ltd vs CGST, Udaipur [2022 (3) TMI 58 - CESTAT New Delhi]
- Clariant Chemicals India Ltd vs CCE & ST, Raigad [2022 (10) TMI 796 - CESTAT Mumbai]
- ITCO Industries Ltd vs CGST & CE, Salem [2022 (6) TMI 1040 - CESTAT Chennai]
- Flexi Caps & Polymers Pvt Ltd vs CGST & CE, Indore [2021 (9) TMI 917 - CESTAT New Delhi]

In these cases, the Tribunals consistently held that CVD+SAD paid post-GST regime for imports made prior to 30.06.2017 are eligible for cash refund under Sec.142(3) of CGST Act 2017, as the credit is no longer available under the GST regime.

2. Jurisdiction of the Tribunal:
The Larger Bench in Bosch Electrical Drive India Pvt Ltd concluded that appeals against orders passed under Sec.142(3) of CGST Act would lie to the Tribunal. The Tribunal reaffirmed that the appellate provisions under the existing law (Chapter V of the Finance Act and the Central Excise Act) continue to apply post-GST regime, thus maintaining the jurisdiction of the Tribunal.

Conclusion:
The Tribunal set aside the impugned Order and allowed the Appeal with consequential relief. The Adjudicating Authority was directed to grant the refund along with interest, calculated from the initial date of filing the refund claim. The Tribunal emphasized that the decisions in Mithila Drugs Pvt Ltd, Clariant Chemicals India Ltd, ITCO Industries Ltd, and Flexi Caps & Polymers Pvt Ltd, supported by the Larger Bench decision in Bosch Electrical Drive India Pvt Ltd, are applicable and binding.

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