TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of 1. Whether the appellant is entitled to refund of Customs Duty (including CVD, Education Cess, S&H Education Cess, and Additional Customs Duty) paid due to non-fulfillment of export obligation under the EPCG Scheme after having initially imported capital goods duty-free under the said scheme.
2. Whether the appellant was eligible to claim Cenvat credit on the Customs duties paid post non-fulfillment of export obligation under the erstwhile Cenvat Credit Rules, 2004, and whether such credit can be refunded in cash under Section 142(3) of the CGST Act, 2017.
3. Whether failure to produce installation certificate and other prescribed documentation under the EPCG scheme disentitles the appellant from claiming Cenvat credit or refund.
4. Interpretation and applicability of Section 142(3) of the CGST Act, 2017 read with Sections 140, 174, and relevant provisions of the Central Excise Act, 1944 and Cenvat Credit Rules, 2004, in relation to refund claims arising from duties paid under the erstwhile regime.
5. Whether the appellant's conduct, including delayed payment of Customs duties and failure to fulfill export obligations, precludes refund or credit claims under principles of equity and legal maxims.
6. Whether the claim for refund under Section 142(3) of CGST Act can be allowed where transitional credit was not availed in terms of Section 140 of the CGST Act.
7. Whether the appellant's reliance on precedents from other Benches and High Courts supports entitlement to refund or credit.
2. ISSUE-WISE DETAILED ANALYSISIssue 1: Entitlement to Refund of Customs Duty Paid Due to Non-Fulfillment of Export Obligation under EPCG Scheme
- Relevant Legal Framework and Precedents:
The EPCG Scheme permits import of capital goods at concessional customs duty subject to fulfillment of export obligations. Notification No. 64/2008-Cus exempts customs duty subject to export obligation. Failure to fulfill export obligation triggers liability to pay the forgone customs duty with interest as per Foreign Trade Policy (FTP) and Handbook of Procedures (HBP), paragraph 4.50.
Precedents include Tribunal decisions holding that non-fulfillment of export obligation results in loss of duty exemption and no refund is admissible upon payment of duty subsequently.
- Court's Interpretation and Reasoning:
The Tribunal noted that the appellant imported capital goods duty-free under EPCG subject to export obligation but failed to fulfill the same. The appellant paid the customs duties years later and claimed refund on the ground of inability to avail Cenvat credit post GST implementation.
The Tribunal emphasized that the EPCG scheme is conditional, and the benefit of duty exemption is contingent upon fulfilling export obligations. Non-fulfillment results in loss of benefit and payment of duty is mandatory.
The appellant's failure to produce installation certificate and other statutory documents further undermined the claim.
- Key Evidence and Findings:
No installation certificate was produced as required under EPCG scheme. The appellant admitted non-fulfillment of export obligation and delayed payment of customs duty.
- Application of Law to Facts:
Since the export obligation was not fulfilled and the capital goods were not evidenced to be installed and used in manufacturing, the appellant was not entitled to retain the benefit of duty exemption or claim refund.
- Treatment of Competing Arguments:
The appellant argued that no demand was raised by Customs for 10 years and that payment of duty was voluntary, hence refund should be allowed. The Tribunal rejected this, holding that voluntary payment after breach of conditions does not confer right to refund.
- Conclusion:
The appellant is not entitled to refund of customs duty paid due to non-fulfillment of export obligation under EPCG scheme.
Issue 2: Eligibility to Claim Cenvat Credit on Customs Duties Paid Post Non-Fulfillment and Refund under Section 142(3) of CGST Act
- Relevant Legal Framework and Precedents:
Cenvat Credit Rules, 2004 permit credit of duties paid on inputs and capital goods used in manufacture. Rule 3(1)(xi)(i) requires capital goods to be received in factory for credit. Section 142(3) of CGST Act provides transitional provisions for refund of amounts paid under existing law but requires disposal as per existing law.
Precedents include Tribunal decisions in M/s Servo Packaging Ltd. (2020) and M/s ITCO Industries Ltd. (2023), and High Court decisions including M/s Rungta Mines Ltd. (2022), interpreting the scope of refund under Section 142(3).
- Court's Interpretation and Reasoning:
The Tribunal examined whether the appellant was eligible to claim Cenvat credit under the old regime. It found that due to non-production of installation certificate, the appellant failed to satisfy Rule 3(1)(xi)(i) conditions, thus not entitled to credit.
Further, Section 142(3) mandates disposal of refund claims as per existing law. Since existing law did not permit refund where credit was not availed as per rules, refund was not admissible.
The Tribunal also rejected appellant's reliance on decisions allowing refund under Section 142(3) where transitional credit was not availed, holding that Section 142(3) does not create new rights but preserves existing rights.
- Key Evidence and Findings:
Absence of installation certificate and statutory compliance; payment of duties post-GST implementation; failure to claim credit within prescribed time.
- Application of Law to Facts:
Since the appellant failed to comply with conditions for claiming credit and did not avail transitional credit under Section 140, refund under Section 142(3) was not permissible.
- Treatment of Competing Arguments:
Appellant argued entitlement to refund citing favorable precedents and that non-availment of credit due to GST implementation should not preclude refund. Tribunal distinguished these precedents based on facts and emphasized that credit/refund rights must have existed under old law at appointed day.
- Conclusion:
The appellant is not entitled to claim Cenvat credit or refund under Section 142(3) of the CGST Act for customs duties paid after non-fulfillment of export obligation.
Issue 3: Effect of Failure to Produce Installation Certificate and Other Documentation under EPCG Scheme
- Relevant Legal Framework:
Notification No. 64/2008-Cus and EPCG Scheme require production of installation certificate from jurisdictional Central Excise officer within six months of import completion to validate use of capital goods in factory.
- Court's Interpretation and Reasoning:
Tribunal found that appellant did not produce installation certificate or original EPCG license despite repeated opportunities. This non-compliance prevented verification of receipt and use of capital goods in manufacture of excisable goods.
Without such evidence, credit under Rule 3(1)(xi)(i) cannot be allowed.
- Key Evidence and Findings:
Non-production of installation certificate or EPCG license; no evidence of capital goods being installed or used in factory.
- Application of Law to Facts:
Non-compliance with statutory procedural requirements disentitled appellant from claiming credit or refund.
- Treatment of Competing Arguments:
Appellant did not produce any satisfactory explanation or evidence to overcome statutory requirements.
- Conclusion:
Failure to produce installation certificate and required documentation precludes entitlement to Cenvat credit or refund under EPCG scheme.
Issue 4: Interpretation and Applicability of Section 142(3) of CGST Act and Related Provisions
- Relevant Legal Framework and Precedents:
Section 142(3) CGST Act provides for disposal of refund claims relating to amounts paid under existing law in accordance with existing law, with refund payable in cash. Section 140 provides for transitional credit. Section 174 saves accrued rights. Relevant case law includes decisions of Hon'ble Jharkhand High Court and various Tribunal benches interpreting these provisions.
- Court's Interpretation and Reasoning:
The Tribunal held that Section 142(3) does not create new rights but preserves existing rights accrued under old law. Refund claims under Section 142(3) must be adjudicated under the existing law applicable at the appointed day.
Failure to claim credit under Section 140 or non-compliance with procedural requirements under old law extinguishes rights to refund under Section 142(3).
Section 174 read with General Clauses Act preserves accrued rights but does not create new rights.
- Key Evidence and Findings:
Appellant failed to claim transitional credit under Section 140; did not comply with procedural requirements; claimed refund under Section 142(3) which was not supported by existing law.
- Application of Law to Facts:
Since appellant had no accrued right to credit or refund under old law at appointed day, Section 142(3) could not confer such right.
- Treatment of Competing Arguments:
Appellant contended that refund should be allowed as a matter of equity and reliance on certain judgments. Tribunal distinguished these on facts and emphasized strict interpretation of taxing statutes and that equitable considerations do not override statutory provisions.
- Conclusion:
Section 142(3) does not entitle appellant to refund where no right existed under old law or where procedural requirements for credit/refund were not complied with.
Issue 5: Effect of Appellant's Conduct and Principles of Equity
- Relevant Legal Principles:
Legal maxim 'nullus commodum capere potest de injuria sua propria' (no one can take advantage of his own wrong) applies to prevent a party from benefiting from its own wrongdoing.
- Court's Interpretation and Reasoning:
Appellant was aware of non-fulfillment of export obligation and failed to produce installation certificate. Capital goods were allegedly diverted elsewhere. Payment of duty was made belatedly after 10 years without justification.
Tribunal held appellant cannot claim refund or credit benefit when conditions of EPCG scheme were violated and statutory requirements ignored.
- Key Evidence and Findings:
Admission of non-fulfillment of export obligation, failure to produce installation certificate, delayed payment of duty, and diversion of capital goods.
- Application of Law to Facts:
Appellant's own wrongful acts disentitle it from claiming refund or credit benefits.
- Treatment of Competing Arguments:
Appellant's plea of hardship or delay was rejected as no equitable relief is available in taxation without statutory mandate.
- Conclusion:
Appellant's claim is barred by principle of equity and legal maxim against profiting from own wrong.
Issue 6: Applicability of Precedents and Distinguishing Conflicting Decisions
- Relevant Legal Framework and Precedents:
Tribunal considered precedents including M/s Servo Packaging Ltd., M/s ITCO Industries Ltd., and High Court decisions such as M/s Rungta Mines Ltd.
- Court's Interpretation and Reasoning:
Tribunal distinguished precedents allowing refund under Section 142(3) where transitional credit was properly claimed or procedural compliance was met. It emphasized that such precedents are not applicable where conditions of scheme or procedural requirements are not fulfilled.
- Key Evidence and Findings:
Appellant failed to comply with procedural requirements and statutory conditions, unlike in favorable precedents.
- Application of Law to Facts:
Precedents relied upon by appellant were not binding or applicable due to factual distinctions.
- Treatment of Competing Arguments:
Appellant's reliance on favorable decisions was rejected on the ground of non-compliance and absence of accrued rights.
- Conclusion:
Precedents allowing refund under Section 142(3) are distinguishable and do not support appellant's claim.
TaxTMI 