2026 (3) TMI 1063 - AT - Central Excise

Transitional Refunds under GST override excise limitation; refund permitted where credit unavailable and procedural performance was impossible.

Transitional credits under the CGST Act were held to constitute vested rights and refund claims arising from the CGST transitional provisions cannot be ... Refund claim of the CVD payment under transitional provisions of CGST Act - not able to take Cenvat credit of CVD due to introduction of GST regime - applicability of Section 11B limitation to transitional refund claims - imported raw materials of PP bags under advance licence. Refund under transitional provisions of CGST Act - HELD THAT: - The Tribunal held that the refund claim arises from the transitional provisions of the CGST Act and not independently from Section 11B of the Central Excise Act; consequently the time limit in Section 11B(2) cannot be invoked to deny a refund specifically permitted under Section 142 of the CGST Act. The decision follows this Tribunal's earlier ruling in M/s Ishan Snax Private Limited [2026 (2) TMI 1076 - CESTAT KOLKATA] and the view taken in M/s. New Age Laminators Pvt. Ltd. [2022 (3) TMI 748 - CESTAT NEW DELHI] that where CVD/SAD credit is not available under the GST regime, an assessee is entitled to refund under the CGST transitional provisions, and denial on limitation grounds is impermissible. [Paras 3, 4] The refund could not be rejected as time-barred under Section 11B and the impugned order was set aside. Final Conclusion: The appeal was allowed and the refund claim of the appellant was held not to be barred by limitation under Section 11B, the impugned order was set aside and the refund claim was allowed. Issues: Whether the time limit under Section 11B of the Central Excise Act, 1944 bars refund of CVD/SAD paid after introduction of GST where credit was not available under GST and refund is claimed under the transitional provisions of the Central Goods and Services Tax Act, 2017 (Section 142).Analysis: The Tribunal examined whether a limitation defence under Section 11B applies to refund claims arising from transitional provisions of the CGST Act. The Tribunal relied on prior precedents holding that transitional credits constitute a vested right and that refund claims flowing from the CGST Act's transitional provisions cannot be denied merely by invoking procedural limitation under Section 11B of the Central Excise Act, 1944. The Tribunal noted that where CVD/SAD credit is not available under the GST regime but was available under the erstwhile regime, the statutory scheme under Section 142 of the CGST Act recognises refund remedies. The Tribunal treated performance of statutory transitional mechanisms as impossible where duties were paid after 01.07.2017 and held that law does not compel performance of an impossibility; accordingly, time-bar under Section 11B cannot defeat a refund claim permitted by Section 142 of the CGST Act. The Tribunal further observed consistent decisions allowing such refunds and directed grant of refund with applicable interest under Section 11BB where appropriate.Conclusion: The time limit prescribed under Section 11B of the Central Excise Act, 1944 is not applicable to refund claims arising under the transitional provisions of the Central Goods and Services Tax Act, 2017; the refund claim is allowed in favour of the assessee.