TaxTMI 
TaxTMI 
2023 (4) TMI 6
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....6.2020 for the aforesaid amount of Rs.18,20,555/- (the amount of Cess). The said refund claim was proposed to be rejected vide Show Cause Notice No.18/03/2020 dated 03.08.2020 on the ground that there is no provision in Cenvat Credit Rules, 2004 (CCR 2004) nor under the provisions of Section 11B of Central Excise Act, 1944 (CEA 1944) mandating cash refund of the Cess in respect of which the balance in Cenvat Credit could not be utilized. The said proposal was initially confirmed vide Order-in-Original No.02/2020-21 dated 07.09.2020 on the grounds that there is no provision for refund of Cenvat Credit except under Rule 5 of CCR 2004 nor the present case is covered under section 142 (9) of CGST Act, 2017 and that the refund claim was held to be barred by time. The appeal thereof has been rejected by Commissioner (Appeals) vide Orderin- Appeal No.020-21-22 dated 15.12.2021 being aggrieved the appellant is before this Tribunal. 2. I have heard Mr. Siva Rajan, ld. Counsel for the appellant and Mr. V.R. Pavan Kumar, ld. Authorised Representative for the Revenue. 3. Ld. Counsel for the appellant has mentioned that amount in question is the amount of Cenvat Credit of EC & SHEC which was ....
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.... The main contention of the learned Counsel of the appellant is that Rule 5 of CCR, 2004 allows refund in cases where for any reason adjustment of accumulated credit is not possible against duty on final products cleared for home consumption. The closure of their factory is well covered by the phrase "for any reason". The Counsel stressed that the above judgments of the Tribunal and High Courts have allowed refund of unutilized CENVAT Credit in similar cases. In the case of Slovak India Co. Pvt. Ltd. (supra), the decision of the Karnataka High Court was even affirmed by the Hon'ble Apex Court and the department's SLP was dismissed and, therefore, the sub-ordinate courts have to interpret the law as is held by the Hon'ble Apex Court. The appellants have also stated that the purchaser of their factory i.e. M/s. New Age Fire Protection Industries Pvt. Ltd. issued a letter stating that all benefits, entitlements and liabilities arising prior to 28.12.2010 shall be solely to the account of appellants only. 4. It is finally submitted that the cash refund of Cenvat credit is allowable despite absence of any specific provision for refund under the erstwhile law as the same is ....
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....ular thing suggested by the name of the cess. In the present case, it is related to education. Cess is generally for such levy which is for some special administrative expense as shall be suggested by the name of the cess. Education cess was levied by virtue of Finance Act No. 2 of 2004 in Section 92 to 94 thereof to be charged as a duty of excise with an objective to fulfill commitment of the government to provide a finance universalized quality basic education. Section 93 thereof reads as follows: 93. Education Cess on Excisable Goods (1) The Education Cess levied under Section 81, in the case of goods specified in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), being goods manufactured or produced, shall be a duty of excise (in this section referred to as the Education Cess on excisable goods), at the rate of two per cent, calculated on the aggregate of all duties of excise (including special duty of 43 excise or any other duty of excise but excluding Education Cess on excisable goods) which are levied and collected by the Central Government in the Ministry of Finance (Department of Revenue) under the provisions of the Central Excise Act, 1944 (1 of 1....
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....nue), under the provisions of the Central Excise Act, 1944 or under any other law for the time being in force. (2) The Secondary and Higher Education Cess on excisable goods shall be in addition to any other duties of excise chargeable on such goods, under the Central Excise Act, 1944 or any other law for the time being in force and the Education Cess chargeable under section 93 of the Finance (No. 2) Act, 1944. (3) The provisions of the Central Excise Act, 1944 and the rules made thereunder, including those relating to refunds and exemptions from duties and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Secondary and Higher Education Cess on excisable goods as they apply in relation to the levy and collection of the duties of excise on such goods under the Central Excise Act, 1944 or the rules made thereunder, as the case may be." Thus, no doubt the Cess are the part of the excise duty. I observe that the levy of EC and SHEC was however dropped and deleted by the Finance Act, 2015. 10. The second question which arises is as to whether the cess are cenvitable. The only provision permitting Cenvat credit of excise duty pa....
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....ducation Cesses are not levied under the GST Act, the same is not meant to be transitioned to the electronic credit register in the GSTN. 13. Further, I observe that the definition of 'eligible duties and taxes' as per the explanation 3 under Section 140 of the CGST Act, 2017 was amended with retrospective effect from 01.07.2017 whereby it is specified that cesses are excluded from the definition of 'eligible duties and taxes', Thus, the credit is ab initio not available for utilization for GST. In view of the above, cesses are not be transitioned through TRAN-1, as per the transitional provisions specified under CGST Act, the credit balances not transitioned to GST regime shall lapse, and, as such, the argument of the appellant the impugned credits never lapse, as there is no provision retaining the same is not sustainable. The appellant cannot circumvent the said legal provision through the route of 142 (3) of the CGST Act. This section reads as follows: "(3) Every claim for refund filed by any person 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 di....
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....st proviso shall be issued unless in the opinion of the Central Government the incidence of duty and interest, if any, paid on such duty has not been passed on by the persons concerned to any other person. A bare perusal of this provision denotes that instead of crediting the amount of refund to the fund, it can be paid to the applicant seeking refund, if such amount is relatable, inter alia to refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made or any notification issued under this Act The word refund is defined in the Explanation and it says that it includes rebate of duty of excise on excisable goods. Thus this section also do not talk about refund of cess after the cess stands omitted. 14. In addition to Section 11B, the only other provision for refunds in existing laws had been Rule 5 of CCR, 2004. To my understanding the interpretation of Rule 5 of CCR, 2004 is that where any inputs are used in the final products which are cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate products cleared for export, the CENVAT credit in respect of the inputs so used shall be allowed to be u....
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....ed deficiency." 16. This Tribunal also in the case of Steel Strips Ltd. Vs. Commissioner of Central Excise, Ludhiana reported as 2011 (269) E.L.T. 257 (Tri.) has held that no equity or good conscience influence fiscal codes without the same being embodied to statutory provisions. The Larger Bench of this Tribunal also held that the plea of injustice or hardship cannot be raised to claim a refund in the absence of statutory mandate. This decision was dealt with by Hon'ble High Court of Mumbai in the case of Gauri Plasticulture Pvt Ltd. (supra) wherein it was held that Rule 5 of CCR, 2004 is related to manufacture in the sense that where any input or input service is used in the manufacture of final product which is cleared for export or used in intermediate product cleared for export or used for providing output service which is exported, then only the Cenvat credit in respect of input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of duty of excise on any final product cleared for home consumption or for export on payment of duty or service tax on output service. If for any reason such adjustment is not p....
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....0 sub-sections and explanations 1, 2 and 3 thereafter. 19. The Explanation 1 refers to Sub- sections (1), (3), (4) and (6), because these four Sub-sections use and employ the term "Eligible Duties" and Explanation 1 confines "Eligible Duties" to 7 specified duties under that Explanation 1, namely Additional Excise Duty under Additional Duties of Excise (Goods of Special Importance) Act, 1957, Additional Duty under Custom and Tariff Act, 1975, Additional Custom Duty on Taxable Articles, Duty of Excise in the First Schedule to the Central Excise Tariff Act, 1985 and National Calamity Contingency Duty under Section 136 of the Finance Act, 2001, etc. Therefore, only the seven specified duties in respect of inputs held in stock and inputs contained in semi finished or finished goods held in stock on the appointed date ie. 01.07.2017 are held eligible to be carried forward and adjusted against GST Output Tax Liability with reference to Explanation 1. Apparently, Education Cess and Secondary and Higher Education Cess or Krishi Kalyan Cess are absent from said seven categories in this Explanation. Therefore, the plain meaning is that Cesses in question are not covered under Explanation 1 ....
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....lear and Sub-section (8) of Section 140, which was emphasized by the learned counsel for the appellant, is not excluded from the effect and operation of Explanation 3 of Section 140 of GST, Education Cess and Secondary and Higher Education Cess and Krishi Kalyan Cess are not included in Explanations 1 and 2 at all. The Departmental Circular dated 02.01.2019 with respect to clarifications regarding Section 140(1) of CGST Act, 2017, has rightly clarified this position with reference to Explanation 3 to Section 140 of the Act. 23. The above discussion is sufficient to hold that transitioning in the Electronic Credit Ledger, the amount of such Education Cess and Secondary and Higher Education Cess, does not entitle appellant/assess to utilize the said unutilised amount of Education Cess and Secondary and Higher Education Cess against the Output GST Liability. The "taking" of the input credit in respect of Education Cess and Secondary and Higher Education Cess in the Electronic Ledger after 2015, after the levy of Cess itself ceased and stopped, does not even permit it to be called an input CENVAT Credit and therefore, mere such accounting entry will not give any vested right to the As....