2024 (9) TMI 919 - AT - Central Excise

Appellants win refund of excess CENVAT credit under Section 142(9) CGST Act transitional provisions

CESTAT Mumbai allowed the appeal regarding refund of excess CENVAT credit under transitional provisions. The appellants had filed revised ER-1 returns for ... Refund of CENVAT credit - upward revision as per the revised ER-1 for the month of June 2017 - refundable under Section 142(9) of the CGST Act, 2017 read with Section 11B of the Central Excise Act, 1944 or not - HELD THAT:- From the facts of the case, it is seen that the appellants had duly followed the procedure and conditions prescribed in complying with the obligations under Cenvat Credit Rules, 2004, and had also complied with in filing revised returns with the department. In terms of legal provisions prescribing the procedure for transitional credit under Section 142(9)(b) of the CGST Act, 2017, when the same is unable to be utilized for further payment of duty/tax, the appellants had applied for refund before the departmental authorities. The main ground on which the refund application of the appellants was held as not entertainable in the impugned order is, that there exists no provision under Rule 5 of the CCR, for cash refund of excess CENVAT credit and therefore the refund in terms of proviso (c) to Section 11B(2) ibid, is not permissible in the case of the appellants - the provisions of Section 142(9)(b) of the CGST Act, is a transitional arrangement wherein it has been specifically provided that such provisions apply as a non-obstanate clause whereby such provisions will have overriding effect, if anything to the contrary is contained under the provisions of existing law i.e., Central Excise Act, 1944, except for the provisions of sub-section (2) of section 11B ibid. Thus, all the conditions of the requirements of Section 11B ibid as it remained under the existing law, other than those relating to Unjust Enrichment clause contained in Section 11B(2) ibid would apply, only if they are not contradictory to the provisions of Section 142(9)(b) of the CGST Act, 2017, in dealing with refund of ‘CENVAT credit’. It is reasonable to conclude that when the Central Excise Act, 1944 amongst other laws relating to old tax regime was repealed by Section 174 of the CGST Act, 2017 and that the CCR is also being superseded vide Notification No.20/2017-C.E. (N.T.) dated 30.06.2017, by the Central Government for smooth implementation of transfer to GST regime in indirect taxation, it is found that the provisions of Section 142 of the CGST Act, 2017 are sufficient to provide for the tax administration for sanction of cash refund in circumstances stated therein, and I find that there is no need and it is not legally feasible to make any specific provision in CENVAT statute itself, for enabling cash refund of excess CENVAT credit relating to earlier regime while moving to the new GST regime. The issue of reversal of excess CENVAT credit under the transitional arrangement as provided under Section 142 of CGST Act, 2017 has already been addressed by the Co-ordinate Bench of the Tribunal in the following cases, and it was held that cash refund of such excess CENVAT credit is permissible. There are no merits in the impugned order passed by the learned Commissioner (Appeals) as it does not stand the scrutiny of law. Therefore, by setting aside the impugned order dated 13.01.2020, the appeal is allowed in favour of the appellants. Issues Involved:1. Jurisdiction of the Tribunal under Section 142 of the CGST Act, 2017.2. Eligibility for refund of CENVAT credit under Section 142(9)(b) of the CGST Act, 2017.3. Applicability of Section 11B of the Central Excise Act, 1944.4. Transitional provisions and their interpretation under GST law.5. Judicial precedents and their relevance to the case.Issue-wise Detailed Analysis:1. Jurisdiction of the Tribunal under Section 142 of the CGST Act, 2017:The Tribunal affirmed its jurisdiction to hear appeals under Section 142 of the CGST Act, 2017, as clarified by the Larger Bench in the case of Bosch Electrical Drive India Pot. Ltd. It was held that an appeal would lie to the Customs, Excise & Service Tax Appellate Tribunal against an order passed under Section 142 of the CGST Act, 2017.2. Eligibility for refund of CENVAT credit under Section 142(9)(b) of the CGST Act, 2017:The appellants contended that the refund of CENVAT credit was due to the upward revision in their revised ER-1 return for June 2017. They argued that the amount should be refunded in cash as per Section 142(9)(b) of the CGST Act, 2017, which overrides any contrary provisions of the existing law. The Tribunal agreed, stating that Section 142(9)(b) is a transitional provision allowing for cash refunds of CENVAT credit when it cannot be utilized in the GST regime.3. Applicability of Section 11B of the Central Excise Act, 1944:The Tribunal examined whether Section 11B of the Central Excise Act, 1944, which governs the refund of excise duty, applies to the case. The appellants argued that the amount in question is 'duty' covered by Section 11B and that they had not passed on the incidence of duty to any other person. The Tribunal found that the conditions of Section 11B, except those related to unjust enrichment, apply to the refund claim under Section 142(9)(b) of the CGST Act, 2017.4. Transitional provisions and their interpretation under GST law:The Tribunal analyzed the transitional provisions under Section 142 of the CGST Act, 2017, which allow for the refund of CENVAT credit in cash. It was noted that the transitional provisions are designed to facilitate the smooth transition from the old tax regime to the GST regime. The Tribunal emphasized that denying cash refunds based on the absence of specific provisions in the CENVAT statute is not legally sustainable.5. Judicial precedents and their relevance to the case:The Tribunal referred to several judicial precedents supporting the cash refund of CENVAT credit during the transition to the GST regime. Notably, the Tribunal relied on the judgment of the Bombay High Court in the case of Combitic Global Caplet Pvt. Ltd. Vs. Union of India, which held that refunds under Section 142(3) of the CGST Act should be paid in cash. Other relevant cases cited include Punjab National Bank v. Commissioner of Central-Tax, Bangalore North, and Monochem Graphics Pvt. Ltd. v. Commissioner of Central Excise & CGST, Delhi West.Conclusion:The Tribunal concluded that the appellants are entitled to a cash refund of the excess CENVAT credit of Rs. 30,52,536/-. The impugned order dated 13.01.2020 was set aside, and the appeal was allowed with consequential relief. The Tribunal emphasized the importance of adhering to judicial discipline and ensuring the proper interpretation of transitional provisions under the GST law.