CESTAT allows cash refund of customs duty under Section 142(3) CGST Act following Bosch Electrical Drive precedent

CESTAT Hyderabad allowed the appeal regarding cash refund of customs duty/CVD under Section 142(3) of CGST Act, 2017. The tribunal held it has jurisdiction to entertain such refund claims, following the Larger Bench decision in Bosch Electrical Drive case (2023). The court ruled that for assessees who paid service tax, excise duty as CVD+SAD or IGST after July 1, 2017, the only recourse is cash refund under Section 142(3). Earlier contrary decisions from Chennai Bench were deemed inapplicable as they preceded the Larger Bench ruling establishing clear jurisdictional authority.

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Issues Involved:
1. Refund claim for re-imported goods due to rejection by overseas importers.
2. Refund claim for differential Excise Duty paid after finalizing CAS-4 certificate.
3. Refund claim for custom duties paid due to non-fulfillment of export obligations.

Summary:

Issue 1: Refund Claim for Re-imported Goods
The appellants exported goods on payment of Excise Duty and claimed a rebate. Some consignments were rejected by overseas importers and sent back, requiring the appellants to pay the initial rebate claim as CVD upon re-import. The appellants filed a refund claim under Section 142(3) of the CGST Act, 2017, as they could not take Cenvat Credit in the GST regime. The Tribunal remanded the matter to the Adjudicating Authority for verification of proper accounting and recording of the re-imported stocks before granting refunds.

Issue 2: Refund Claim for Differential Excise Duty
The appellants transferred goods between their units, initially paying Excise Duty and later paying differential Excise Duty after finalizing the CAS-4 certificate. As this differential duty was paid after 01.07.2017, the appellants could not claim Cenvat Credit in the GST regime and filed for a refund under Section 142(3) of the CGST Act, 2017. The Tribunal allowed the appeals and directed the refund with consequential relief.

Issue 3: Refund Claim for Custom Duties
The appellants imported raw materials under Advance Licenses but failed to fulfill export obligations, leading to the payment of customs duties (CVD + SAD as IGST) after 01.07.2017. They sought a refund under Section 27 of the Customs Act, 1962, as they could not claim Cenvat Credit in the GST regime. The Tribunal held that the appellants are eligible for cash refunds under Section 142(3) of the CGST Act, 2017, following the Larger Bench decision in Bosch Electricals India Pvt Ltd. The Tribunal allowed the appeals and directed the refund with consequential relief.

General Observations:
The Tribunal noted that the refund claims should have been directed to the appropriate authorities, and any jurisdictional issues should have been addressed by returning the claims to the appellants. The Tribunal emphasized that the only recourse for such refunds is under Section 142(3) of the CGST Act, 2017, and consistently upheld the eligibility for cash refunds in similar cases. The Tribunal disposed of all appeals accordingly.

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