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of <h1>Section 142(3) CGST overrides central excise except Section 11B(2); refund allowed as unjust enrichment addressed</h1> <h3>M/s Medispray Laboratories Pvt Ltd Versus Commissioner of Central GST, Goa</h3> M/s Medispray Laboratories Pvt Ltd Versus Commissioner of Central GST, Goa - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether refund in cash is payable under Section 142(3) of the CGST Act, 2017 in respect of CVD (countervailing duty) paid post-implementation of GST for regularization of imports made prior to 01.07.2017. 2. Whether the bar contained in Section 11B(2) of the Central Excise Act, 1944 (unjust enrichment provisos) precludes grant of refund under Section 142(3) when CVD credit accrues after transition. 3. Whether Cenvat credit entitlement under pre-GST rules (Cenvat Credit Rules, 2004 - in particular Rule 3 read with Rule 9 and refund provisions under Rules 5/5A/5B) is saved by the CGST enactment (including Section 174(2)(c)) and thus capable of cash refund under Section 142(3) or Section 142(6)(a). 4. Whether facts showing duty incidence not passed on (CA certificate/other evidence) satisfy provisos to Section 11B(2) and negate unjust enrichment, making refund admissible. 5. Whether precedents relied upon by Revenue (including decisions allegedly limiting refund to specific refund rules or denying credit) are applicable or distinguishable. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Applicability of Section 142(3) CGST Act for cash refund of CVD paid post-GST on pre-GST imports Legal framework: Section 142(3) CGST Act provides that every claim of refund filed before, on or after the appointed day for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing shall be paid in cash, notwithstanding anything to the contrary contained under existing law except sub-section (2) of Section 11B CEA. Precedent treatment: Multiple decisions (including High Court and Tribunal decisions cited in the judgment) have held that Section 142(3) mandates cash refund where credit accrues under existing law after transition; such decisions have been followed by the Court. Interpretation and reasoning: The Tribunal interprets 'CENVAT credit' and 'any other amount paid' in Section 142(3) broadly to include CVD discharged post-GST for regularization of imports made prior to 01.07.2017. The explanatory cross-reference to Section 2(48) (definition of existing law) and the explanation to Section 142 confirming the meaning of 'CENVAT credit' supports treating CVD as Cenvat credit for Section 142(3) purposes. The non-obstante nature of Section 142(3) renders it overriding except as limited by Section 11B(2) CEA. Ratio vs. Obiter: Ratio - Section 142(3) entitles an assessee to cash refund of Cenvat credit (including CVD) arising under existing law after transition unless barred by Section 11B(2). Conclusion: Section 142(3) applies to the CVD in question and mandates refund in cash, subject only to considerations under Section 11B(2). Issue 2 - Effect of Section 11B(2) CEA (unjust enrichment) on refund under Section 142(3) Legal framework: Section 11B CEA deals with refund of duty and contains sub-section (2) that addresses unjust enrichment and provisos specifying circumstances where refund should be allowed (including clauses (c) and (d) concerning refund of duty on inputs and duty borne by manufacturer without passing incidence). Precedent treatment: Authorities cited by the Tribunal (including High Court and Tribunal decisions) interpret Section 142(3) as overriding existing law except Section 11B(2); when Section 11B(2) is engaged, its provisos determine applicability. Prior authorities also recognize that Section 11B does not apply to refunds related to input credit in certain contexts. Interpretation and reasoning: The Tribunal finds that the present facts fall within provisos (c) and (d) to Section 11B(2): (c) where refund involves credit of duty paid on goods used as input and refund is granted in accordance with CCR, 2004; (d) where duty is paid by manufacturer and incidence not passed on. The assessee produced evidence (CA certificate) that incidence of duty was not passed on. Therefore, even if Section 11B(2) were attracted, the unjust enrichment bar is inapplicable because the provisos directing grant of refund are satisfied. Ratio vs. Obiter: Ratio - Section 11B(2) does not bar refund where provisos (c) and (d) are satisfied; thus unjust enrichment objection is answered where duty incidence is not passed on and refund pertains to inputs credit under CCR. Conclusion: Section 11B(2) does not prevent grant of cash refund under Section 142(3) on the facts; the provisos apply and preclude denial on unjust enrichment grounds. Issue 3 - Saving of pre-GST rights (CCR entitlements) by Section 174(2)(c) CGST Act and entitlement to Cenvat credit/refund Legal framework: Section 174(2)(c) CGST Act provides that repeal of erstwhile enactments shall not affect rights, privileges, obligations, or liabilities acquired, accrued or incurred under the repealed Acts; CCR 2004 and CEA are 'existing law' for transitional purposes. Precedent treatment: Decisions (including Adfert Technologies and subsequent dismissals of SLPs or supportive judgments) have held that rights to credit under pre-GST law survive by virtue of savings provisions and are not extinguished by CGST ARt. Interpretation and reasoning: The Tribunal reasons that the right to Cenvat credit on CVD (accruing under CCR for imports made pre-GST) is a vested right saved by Section 174(2)(c), and consequently the right to claim credit and obtain refund on such credit is preserved despite procedural changes following GST. The Tribunal relies on the principle that when levy/liability is saved, the corresponding right to claim credit is also saved. Ratio vs. Obiter: Ratio - Rights to claim Cenvat credit under CCR on pre-GST transactions are saved by Section 174(2)(c) and therefore refunds arising therefrom can be pursued under Section 142(3). Conclusion: The Appellant's entitlement to Cenvat credit (and consequential cash refund) survives GST enactment by operation of Section 174(2)(c) and related transitional provisions. Issue 4 - Applicability of Section 142(6)(a) for proceedings relating to claims for Cenvat credit and its interplay with Section 142(3) Legal framework: Section 142(6)(a) CGST Act refers to proceedings of appeal, review and reference relating to claim for Cenvat credit; Section 142(3) prescribes cash refund where credit accrues under existing law. Precedent treatment: Tribunal observes authorities treating Section 142(6) as relevant where disputes concern entitlement to Cenvat credit post-transition and recognizing refund in cash where credit is established. Interpretation and reasoning: The Tribunal finds that the present dispute concerns admissibility of Cenvat credit of CVD paid to regularize imports; since eligibility of credit is not in dispute (Department accepts admissibility of credit prior to GST), Section 142(6)(a) and Section 142(3) together mandate cash refund of established credit that cannot be carried forward as ITC under GST. Ratio vs. Obiter: Ratio - Where claim pertains to Cenvat credit accrued post-transition and the credit is found admissible, refund in cash under Section 142(6)(a) read with Section 142(3) is available. Conclusion: Section 142(6)(a) reinforces the entitlement to refund where Cenvat credit claims survive transition and are accepted; refund in cash is therefore allowable. Issue 5 - Evidentiary requirement as to non-passing of duty incidence and interplay with refund provisions Legal framework: Provisos to Section 11B(2) require consideration of unjust enrichment, including conditions where duty was borne by manufacturer and incidence not passed on; evidentiary support (e.g., CA certificate) is relevant to establish non-passing. Precedent treatment: Courts and Tribunals have accepted documentary evidence to establish incidence not passed on and thereby discharge unjust enrichment objection. Interpretation and reasoning: The Tribunal notes the Appellant produced a CA certificate certifying that the burden of duty was not passed on; coupled with the nature of the transaction (supporting manufacture on loan for principal), the facts satisfy proviso (d) to Section 11B(2). Accordingly, unjust enrichment is rebutted. Ratio vs. Obiter: Ratio - Satisfactory evidence that duty incidence was not passed on negates the unjust enrichment bar and supports grant of refund. Conclusion: The evidentiary record establishes non-passing of duty incidence; therefore refund is not barred on unjust enrichment grounds. Issue 6 - Precedential distinctions and applicability of contested decisions relied upon by Revenue Legal framework: Application of precedents requires matching of factual and legal matrices; where earlier decisions concern availability of credit or application of specific refund rules, their ratio must be examined for congruence. Precedent treatment: The Tribunal distinguishes decisions relied upon by Revenue (e.g., decisions limiting refund to particular rules or denying credit) and finds supporting authorities (including jurisdictional High Court and Tribunal judgments) that directly uphold refund under Section 142(3) for CVD paid post-GST. Interpretation and reasoning: The Tribunal finds that some decisions cited against the Appellant are factually distinguishable (e.g., where credit itself was denied) or were misread by the Commissioner (Appeals). Decisions such as Flexi Cap are held to consider Section 142(3) and support the Appellant; contrary decisions are not applicable where facts differ or where admissibility of credit was conceded. Ratio vs. Obiter: Ratio - Precedents granting cash refund under Section 142(3) where credit accrues post-transition and where unjust enrichment is not shown are applicable and binding on similar facts; contrary decisions are distinguishable. Conclusion: The weight of precedent supports the grant of refund under Section 142(3) in the present facts; Revenue's cited authorities are distinguishable or inapplicable. Final Disposition (consequential legal conclusion) The impugned administrative orders denying refund cannot be sustained; the claim for cash refund of Cenvat credit (CVD) paid post-implementation of GST for regularization of pre-GST imports is allowable under Section 142(3) read with savings under Section 174(2)(c) and Section 142(6)(a), and is not barred by Section 11B(2) given satisfaction of provisos and evidence that the duty incidence was not passed on. The appeal is allowed with consequential relief as per law.
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