2025 (9) TMI 257 - AT - Central Excise

Admissible CVD/SAD credits from pre-1.7.2017 bill of entry assessments refundable in cash under Section 146(6) read with Section 142(3)

M/s JSW Steel Limited Versus Commissioner of CGST & Central Excise, Raigad

M/s JSW Steel Limited Versus Commissioner of CGST & Central Excise, Raigad - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether amounts of Countervailing Duty (CVD) and Special Additional Duty (SAD) paid after 01.07.2017 in respect of imports provisionally assessed on bills of entry filed prior to 01.07.2017 are refundable in cash under Section 142(3) of the CGST Act when CENVAT credit regime ceased on introduction of GST. 2. Whether Section 142(3) of the CGST Act permits grant of cash refund of 'any other amount' (including CVD/SAD) paid under the existing law (Excise/Customs/Service Tax regime) notwithstanding absence of an express refundable mechanism under that existing law. 3. Whether principles of unjust enrichment, carry-forward of credit to electronic credit ledger, or doctrine of necessity preclude cash refund under Section 142(3) in the factual matrix where the assessee could not utilise CENVAT credit because of the GST transition. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Refundability under Section 142(3) of CGST Act of CVD/SAD paid after 01.07.2017 Legal framework: Section 142(3) of the CGST Act requires claims under transitional provisions to be disposed of 'in accordance with the provisions of the existing law'. Section 146(6) (referred) directs disposal of CENVAT credit claims in accordance with existing law; the transitional regime contemplates refund/credit of amounts admissible under the earlier law. Precedent Treatment: The Tribunal's Larger Bench decision in Bosch (Larger Bench) and subsequent coordinate Bench decisions (e.g., Sri Chakra Poly Plast, OSI Systems, SI Group, Clariant, Brose/Bosch line) have held that cash refund under Section 142(3) is permissible where amounts paid after 01.07.2017 cannot be availed as CENVAT credit post-GST. Decisions to the contrary from some High Courts/benches (e.g., Rungta Mines, Ganges International) have been considered but were distinguished on context or treated as not addressing Section 142(3) in the same manner. Interpretation and reasoning: The Tribunal reasons that Section 142(3) is wide enough to encompass 'any other amount' paid under existing law and that where a claimant paid CVD/SAD post-01.07.2017 and cannot avail CENVAT credit because of the GST regime, the transitional provision permits disposal of such claims in accordance with existing law - which, read together with the objective of avoiding unjust enrichment and providing relief for amounts actually paid, supports cash refund. The Tribunal relies on prior coordinate decisions (particularly the Larger Bench and Sri Chakra) holding that cash refund is available and finds those authorities applicable to the facts at hand. The Tribunal distinguishes contrary authorities by noting differences in factual context and the scope of Section 142(3) as interpreted by the Larger Bench and subsequent decisions. Ratio vs. Obiter: The holding that CVD/SAD paid after 01.07.2017 in respect of bills of entry filed prior to 01.07.2017 is refundable in cash under Section 142(3) (subject to usual checks such as absence of unjust enrichment) is ratio decidendi, grounded on the Larger Bench and consistent coordinate bench jurisprudence. Remarks distinguishing Rungta Mines and Ganges International as being in different contexts are explanatory and therefore obiter to the extent they do not overturn those decisions. Conclusions: The Tribunal concludes that the claimant is entitled to cash refund of CVD/SAD paid post-01.07.2017 where CENVAT credit cannot be availed post-GST, and that the earlier order denying refund must be set aside. The Tribunal directs payment with applicable interest within a stipulated period. Issue 2 - Scope of 'any other amount' and application of existing law (Excise/Service Tax rules) to transitional refunds Legal framework: Section 142(3) contemplates disposal in accordance with 'existing law' which includes the erstwhile Central Excise, Customs and Service Tax regimes; the statutory phrase 'any other amount' is central to whether amounts not expressly refundable under existing law can be refunded under the transitional provision. Precedent Treatment: The Larger Bench (Bosch) and several subsequent Benches have interpreted Section 142(3) as capable of embracing refunds of sums that were not explicitly refundable under the earlier statute, where equitable and legal principles justify such relief. Some other decisions (and certain High Court rulings) took a narrower view, holding that absent express refundability in the existing law, Section 142(3) cannot create a new head of refundable amounts. Interpretation and reasoning: The Tribunal accepts the broader interpretation: Section 142(3)'s reference to 'any other amount' and disposal 'in accordance with the provisions of the existing law' does not preclude refund where the claimant is otherwise entitled to relief because the amount was paid and cannot be utilized as credit post-transition. The Tribunal reasons that the transitional machinery contemplates equitable adjustment; where credit cannot be realized, refund in cash is an available remedy under Section 142(3) read with the object of transition. The Tribunal relies on the Larger Bench's admonition and coordinate decisions that the transitional provision was intended to prevent hardship arising out of the shift to GST. Ratio vs. Obiter: The Tribunal's statement that Section 142(3) encompasses 'any other amount' for the purposes of transitional refunds is ratio where applied to allow the refund here. Distinguishing contrary authorities on the basis of their different factual or statutory focus is obiter to the extent it comments beyond the necessary analysis. Conclusions: The Tribunal concludes that the statutory phrase 'any other amount' in Section 142(3), read in the context of transitional justice and the Larger Bench precedents, supports cash refund of CVD/SAD paid post-implementation of GST when such amounts cannot be availed as credit. Issue 3 - Unjust enrichment, carry-forward of credit, and doctrine of necessity Legal framework: Refund law is constrained by the principle against unjust enrichment; transitional provisions also allow carry-forward of admissible credits to an electronic credit ledger if permitted. The doctrine of necessity has been invoked in some decisions to provide relief where legislative silences produce hardship. Precedent Treatment: OSI Systems and other coordinate decisions held that where amounts were paid out of pocket and no unjust enrichment results, refund should be allowed. Some decisions (Ganges International) directed carry-forward rather than cash refund where statutory architecture permits transfer to electronic ledger. The Tribunal references decisions invoking doctrine of necessity in support of providing relief where existing law lacked an express cash refund mechanism. Interpretation and reasoning: The Tribunal examines unjust enrichment and finds it not attracted where the assessee paid the duty in its own pocket and cannot now avail credit; therefore unjust enrichment does not block refund. The Tribunal acknowledges that carry-forward to the electronic credit ledger is an option under the existing law but holds that Section 142(3) is not confined to carry-forward and permits refund where necessary. The Tribunal notes that invocation of the doctrine of necessity has been accepted in earlier decisions to bridge gaps in transitional relief, reinforcing allowance of refund where statutory provisions would otherwise produce unfair denial of relief. Ratio vs. Obiter: The conclusion that unjust enrichment does not bar refund in the factual matrix is ratio. Observations on the doctrine of necessity and the permissibility of carry-forward versus cash refund are explanatory and serve to distinguish authorities; portions applying doctrine as a supplementary rationale are obiter where not strictly required to support the primary statutory interpretation. Conclusions: The Tribunal concludes that unjust enrichment does not preclude refund where the claimant paid CVD/SAD out of pocket and cannot avail credit; carry-forward is not the sole remedy; and doctrine of necessity may support relief where transitional provisions would otherwise frustrate entitlement. Accordingly, refund in cash with interest is directed. Disposition and Relief (Court's Conclusion) The Tribunal, applying the Larger Bench and consistent coordinate bench jurisprudence and distinguishing contrary authorities on contextual grounds, allows the appeal, sets aside the impugned order denying refund, and directs payment of the cash refund of the specified CVD/SAD amount with applicable interest within the timeline ordered by the Tribunal. The decision to grant refund under Section 142(3) is rendered as the operative ratio of the judgment.