2025 (1) TMI 987 - AT - Central Excise

Tribunal Orders Cash Refund of Duties Under CGST Act, 2017; Interest and Jurisdiction Confirmed; Appeals Order Overturned.

M/s Salvi Chemical Industries Ltd. Versus Commissioner of CGST & Central Excise, Palghar

M/s Salvi Chemical Industries Ltd. Versus Commissioner of CGST & Central Excise, Palghar - TMI 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment are:Whether the Appellant is entitled to a cash refund of the Countervailing Duty (CVD) and Special Additional Duty (SAD) paid under the transitional provisions of the Central Goods and Services Tax (CGST) Act, 2017.Whether the non-payment of interest and penalties affects the eligibility for a refund of CVD and SAD.Whether the CESTAT is empowered to grant such a refund under the CGST Act, 2017.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Entitlement to Cash Refund of CVD and SADRelevant legal framework and precedents: The Appellant sought a refund under Section 142 of the CGST Act, 2017. The Tribunal considered precedents, including the decisions in the cases of Servo Packaging Ltd. and Clariant Chemicals India Ltd., which addressed similar issues regarding the refund of duties paid post-GST implementation.Court's interpretation and reasoning: The Tribunal analyzed whether the CVD and SAD paid post-GST implementation could be refunded in cash when the Appellant could not avail of these amounts as CENVAT Credit. The Tribunal noted consistent decisions by coordinate benches that supported the refund eligibility.Key evidence and findings: The Tribunal found that the Appellant paid the duties after the CGST Act came into force and was unable to claim CENVAT Credit for these amounts, thereby supporting the claim for a cash refund.Application of law to facts: The Tribunal applied the legal framework to conclude that the Appellant was entitled to a cash refund of the CVD and SAD, aligning with precedent decisions.Treatment of competing arguments: The Tribunal addressed the contrary decision in Servo Packaging Ltd. but noted that subsequent decisions, including one from the same Chennai Bench, favored the Appellant's position.Conclusions: The Tribunal concluded that the Appellant is entitled to a cash refund of the CVD and SAD paid under the transitional provisions of the CGST Act.Issue 2: Impact of Non-payment of Interest and PenaltiesRelevant legal framework and precedents: The Tribunal examined the applicability of Rule 9(1)(b) of the CENVAT Credit Rules, 2004, and the transitional provisions under Section 142 of the CGST Act.Court's interpretation and reasoning: The Tribunal reasoned that the non-payment of interest and penalties did not preclude the refund of CVD and SAD, especially since the Customs Authority had exercised discretion in initially allowing non-payment of interest.Key evidence and findings: The Appellant had paid the interest during the pendency of the appeal, which was communicated to the Respondent-Department.Application of law to facts: The Tribunal found that the payment of interest post-appeal did not affect the eligibility for a refund, as there was no explicit condition in the relevant rules requiring such payment for refund eligibility.Treatment of competing arguments: The Tribunal noted that the Refund Sanctioning Authority's requirement for interest payment was not in conformity with the law.Conclusions: The Tribunal concluded that the non-payment of interest and penalties did not affect the Appellant's entitlement to a refund.Issue 3: Empowerment of CESTAT to Grant RefundRelevant legal framework and precedents: The Tribunal referred to Section 142 of the CGST Act and the precedent decisions that empowered it to adjudicate on refund claims.Court's interpretation and reasoning: The Tribunal interpreted the legal provisions to affirm its jurisdiction to grant the refund.Key evidence and findings: The Tribunal relied on prior decisions that established its authority to decide on such matters.Application of law to facts: The Tribunal applied the legal provisions to establish its jurisdiction over the refund claim.Treatment of competing arguments: The Tribunal addressed contrary views by highlighting the evolution of the legal position through subsequent decisions.Conclusions: The Tribunal concluded that it was empowered to grant the refund under the CGST Act.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: 'In all these case laws, the issue was identical i.e., as to whether CVD+SAD as part of Custom Duties paid subsequent to 01.07.2017 on account of non-fulfilment of Export Obligation, are eligible for cash refund when the Appellant cannot take these amounts as CENVAT Credit.'Core principles established: The Tribunal established that the Appellant is entitled to a cash refund of CVD and SAD paid post-GST implementation, irrespective of the non-payment of interest and penalties, provided the Appellant could not avail of CENVAT Credit.Final determinations on each issue: The Tribunal set aside the order of the Commissioner (Appeals) and directed the Respondent-Department to pay the refund with applicable interest within two months.