Transitional refund of CVD and SAD preserved; cash refund allowed where CENVAT credit could not be carried forward under GST.

Where duties of CVD and SAD paid under the pre GST CENVAT regime were admissible as CENVAT credit but could not be carried forward after the appointed day, the transitional provisions preserve the right to claim refund: Sections 142(3) and 142(6) require disposal under the existing law and cash payment where credit cannot be transitioned, and such refunds attract interest under the Central Excise Act. Reliance on excise denial conditions that would extinguish vested rights or impose impossibility was rejected; refund with interest was directed.

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Issues: Whether, where CVD and SAD paid under the erstwhile law were admissible as CENVAT credit but could not be availed or transitioned after the appointed day, the claim for cash refund of such CVD and SAD is maintainable under Section 142(3) and Section 142(6) of the Central Goods and Services Tax Act, 2017.

Analysis: The Tribunal examined the interplay between the erstwhile CENVAT regime (including Rule 3 and Rule 9 of the CENVAT Credit Rules, 2004) and the transitional provisions contained in Sections 140 to 142 of the Central Goods and Services Tax Act, 2017. It noted that CVD and SAD paid pursuant to regularisation under the Customs Tariff Act, 1975 were admissible as CENVAT credit under the pre-GST law but, after implementation of GST from the appointed day, there existed no mechanism to transition or utilise that credit where duties were paid after the appointed day. The Tribunal held that Sections 142(3) and 142(6) operate to preserve accrued rights by mandating that claims for refund of CENVAT credit or duty paid under the existing law shall be disposed of under the existing law and any amount eventually accruing shall be paid in cash where such credit was not carried forward under GST. The Tribunal rejected reliance on the conditions of Section 11B(2) of the Central Excise Act, 1944 to deny a refund that is specifically permitted by the CGST transitional provisions, observing that denial would extinguish a vested right, offend legitimate expectation, and impose an impossibility on the claimant who could not perform the transitional act of carrying forward credit. The Tribunal also relied on consistent judicial precedents where refunds of CVD and SAD in analogous circumstances were granted, and directed refund with interest under Section 11BB of the Central Excise Act, 1944 within the stipulated period.

Conclusion: The appellant is entitled to cash refund of the CVD and SAD paid, under Section 142(3) and Section 142(6) of the Central Goods and Services Tax Act, 2017, with interest as per Section 11BB of the Central Excise Act, 1944; the impugned order is set aside and the appeal is allowed.

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