TaxTMI 
TaxTMI 
2024 (4) TMI 108
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....Rules, 2004.The Respondent had denied the refund to the tune of Rs. 53,46,085/. Being aggrieved and feeling dissatisfied by the impugned order dated 14.12.2022, the Appellant preferred the captioned Appeal. 2. Shri Hardik Modh, Learned Counsel appearing on behalf of the Appellant submits that the refund was denied invoking the Rule 11 (3) of Cenvat Credit Rules, 2004 which was introduced with effect from 01.03.2007 vide Notification No. 10/2007 - CE (NT) dated 01.03.2007 whereas the goods were exempted from Additional Duties of Excise (Textiles and Textile Articles) "ADE (TTA)" vide Notification No. 31/2004- CE dated 09.07.2004. Therefore, the provisions of Rule 11 (3) of Cenvat Credit Rules, 2004 is not applicable retrospectively when the additional duties of excise was exempted under Notification No. 31/2004-CE. Accordingly, the Cenvat credit on ADE shall not lapse. In support, he placed reliance on the following judgments:- (a) CCEx, Bangalore- II vs. Gokaldas Intimate Wear [2011 (70) ELT 351 (Kar.)] upheld by Hon'ble Supreme Court reported at - 2020(374) E.L.T. A41 (S.C.). (b) Ramco International vs. CCEx, Jalandhar [2014 (304) ELT 434) (Tri.- Delhi)], 2....
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.... Kurup, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. 4. We have carefully considered the submission made by both sides and perused the records. We find that the appellant's refund claim in terms of Section 142 was rejected on the following grounds:- (i) The credit of Additional Duty of Excise ADE (TTA) was lapsed in terms of Rule 11 (3) of Cenvat Credit Rules, 2004. (ii) The refund claim for the same amount was rejected in the past. 4.1 As regard the first ground we find that the appellant availed the exemption from ADE (TTA) in respect of their finished product vide Notification No. 31/2004 dated 09.07.2004 at that time Rule 11 (3) of Cenvat Credit Rules, 2004 was not in force whereas the same came into force on 01.03.2007 vide Notification No. 10/2007 - CE (NT), therefore, the provisions of Rule 11 (3) cannot be applied retrospectively in respect of exemption Notification No. 31/2004- CE. This issue has been considered in the following judgment:- (a) CCEx, Bangalore- II vs. Gokaldas Intimate Wear -2011 (270) ELT 351 (Kar.) "This appeal is preferred against the order passed by....
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....ed on the final product being exempted subsequently. Only if any products are purchased subsequent to the said exemption and if any tax is paid on such inputs, as the final product is exempted from payment of tax, the assessee would not be entitled to avail the cenvat credit on such inputs. But the Cenvat credit availed on such inputs till the date of exemption, they vest in the assessee and the assessee cannot be divested of that credit as the law does not provide for the same. Therefore, the authorities taking advantage of the notification exempting the final product cannot claim reversal of cenvat credit either in respect of final product which have come into existence on the date of the notification or on the inputs stored in the godown or the work in progress and finished products. Therefore, the judgment in the aforesaid case squarely applies to the case on hand and the Tribunal was justified in granting benefit. 5. It was pointed out to us that in the year 2008 (sic) sub-rule (3) was inserted by a Notification No. 10/2007 with effect from 1-3-2007, which reads as under :- "(3) A manufacturer or producer of a final product shall be required to pay an amount ....
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....e date from which the assessee was granted exemption from payment of Excise duty in respect of final products. Thus, when the reverse of Cenvat credit was given to the assessee on that date, final product was not exempted. In view thereof, Rule 6(1) of the Cenvat Credit Rules, 2002/2004 shall not be applied since the present cases are squarely covered by the judgment dated 11-8-1999 passed by this Court in "Collector of Central Excise, Pune v. Dai Ichi Karkaria Ltd." *1999 (112) E.L.T. 353 S.C.)]. In the circumstances therefore and for the reasons stated in the said judgment, these appeals fail and are accordingly dismissed. No costs." The Karnataka High Court in its impugned order had held that Cenvat credit availed on inputs till the date of amendment of Cenvat Credit Rules, 2004 on 1-3-2007 was available. Till this date, assessee was entitled to benefit, of the Cenvat credit in respect of inputs contained in the work in progress and semi-finished products. Since amendment in CCR restricting availment of credit is prospective in nature and period involved anterior to 1-3-2007, there was no need to reverse the credit. High Court relied on its earlier judgment in ....
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....product whether cleared for home consumption or for export, or for payment of service tax on any output service, whether provided in India or exported." As is seen from the above Rule, the obligation on the part of the assessee to reverse the credit is only in that case where he opts for exemption from the duty based upon a Notification relatable to value or quantum of the clearances. Inasmuch in the present case, the appellants' final product became unconditionally exempt and the exemption was not dependent upon the value or quantum of clearance in a financial year, it has to be held that the said Rule 9(2) is not applicable. In fact, I find that the provisions were subsequently changed in the new CENVAT Credit Rules, 2002, with the introduction of Rule 11(3), with effect from 1-3-2007. In terms of the said Rule 11(3)(ii), where the final product become exempted absolutely under Section 5A of the Act, the quantum of CENVAT credit lying in his balance credit shall lapse and shall not be available for utilisation for payment of duty on any other product whether cleared for home consumption or for export. The said mandate of law was effective with effect from 1-3-2007, i.e.,....
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....he introduction of GST there is a restriction for these cesses to be transitioned into GST by virtue of Section 140(1) of the Act and therefore the appellant did not transfer the said credit of cesses into GST and preferred to file the refund claim under Section 11B of the Central Excise Act. This issue was considered by the Division Bench of the CESTAT, New Delhi in the case of Bharat Heavy Electricals Ltd. cited supra and after considering the decision of the Apex Court as well as the High Court of Karnataka in the case of Slovak India Trading Co. Pvt. Ltd. has held that the assessee is entitled to refund of an unutilized credit of Education Cess and Higher Education Cess after the introduction of GST. It is pertinent to reproduce the said findings of the Division Bench which is contained in paras 4 & 5 which is reproduced herein below : "4. We have carefully gone through the rival arguments. There is no dispute that on 1-7-2017, the cesses credit validly stood in the accounts of the assessee and very much utilizable under the existing provisions. The appellants could not carry over the same under the GST regime. Thus the appellants were in a position where they could no....
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.... case of CCE & ST v. Andhra Sugars Ltd. cited supra and the Larger Bench decision of the Tribunal, Bangalore in the case of J.K. Tyre & Industries Ltd. v. Asst. Commissioner of Central Excise wherein the Larger Bench has held that the Tribunal is bound by the decision of the jurisdictional High Court and is not bound by the decision of other High Courts. Further, I find that the two decisions relied upon by the Department in the case of Bharat Heavy Electricals Ltd. and Mylan Laboratories both the decisions have been rendered by Single Member of the Tribunal whereas the decision in the case of Bharat Heavy Electricals Ltd. has been rendered by Division Bench of CESTAT, New Delhi which would prevail over the decision of the Single Member. Further, I find that the decision of the Hon'ble Madras High Court in the case of Sutherland Global Services Pvt. Ltd. is not applicable in the present case because the said decision was on the issue whether cess can be transitioned into GST or not? Whereas the issue in the present case is whether unutilized Cenvat credit of Education Cess and Secondary and Higher Education Cess could be claimed as refund under Section 11B of the Central Excise Act....
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.... "5. ******* The Tribunal has noticed that various case laws in which similar claims were allowed. The Tribunal, in our view, is fully justified in ordering refund particularly in the light of the closure of the factory and in the light of the assessee coming out of the Modvat Scheme. In these circumstances, we answer all the three questions as framed in para 17 against the Revenue and in favour of the assessee." 14. The Supreme Court also dismissed the appeal filed by the Department to assail the aforesaid order of the Karnataka High Court and the order is reproduced below : "Delay condoned. The Tribunal while allowing the appeal filed by the respondent assessee has relied upon the following decisions : (1) Eicher Tractors v. CCE, Hyderabad, 2002 (147) E.L.T. 457 (Tri. - Del.) (2) Shree Prakash Textiles (Guj.) Ltd. v. CCE, Ahmedabad, 2004 (169) E.L.T. 162 (Tri. - Mumbai) (3) CCE, Ahmedabad v. Babu Textile Industries, 2003 (158) E.L.T. 215 (Tri. - Mumbai); and (4) CCE, Ahmedabad v. Arcoy Industries, 2004 (170) E.L.T. 507 (Tri. - Mumbai). of the Tribunal in which it has been held that the assessee is entitled....
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....law that such credits would lapse. Thus merely by change of legislation suddenly the appellants could not be put in a position to lose this valuable right. Thus we find that the ratio of Apex Court's judgment is applicable as decided in cases where the assessee could not utilize the credit due to closure of factory or shifting of factory to a non-dutiable area where it became impossible to use these credits. Accordingly the ratio of such cases would be squarely applicable to the appellant's case. Following the judgment of Hon'ble Karnataka High Court in the case of 2006 (201) E.L.T. 559 (Kar.) in the case of Slovak India Trading Co. Pvt. Ltd. and similar other judgments/decisions cited supra, we hold that the assessee is eligible for the cash refund of the cessess lying as Cenvat credit balance as on 30-6-2017 in their accounts. The decision of the Larger Bench in the case of Steel Strips cited by the Learned Departmental Representative could not be applicable in view of the contradictory decisions of High Courts on the same issue." (Emphasis supplied) 17. In Schlumberger Asia Services, the Tribunal followed the aforesaid decision of the Tribunal in Bharat Heavy E....
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....Sugars Ltd. cited supra and the Larger Bench decision of the Tribunal, Bangalore in the case of J.K. Tyre & Industries Ltd. v. Asst. Commissioner of Central Excise wherein the Larger Bench has held that the Tribunal is bound by the decision of the jurisdictional High Court and is not bound by the decision of other High Courts. Further, I find that the two decisions relied upon by the Department in the case of Bharat Heavy Electricals Ltd. and Mylan Laboratories both the decisions have been rendered by Single Member of the Tribunal whereas the decision in the case of Bharat Heavy Electricals Ltd. has been rendered by Division Bench of CESTAT, New Delhi which would prevail over the decision of the Single Member. Further, I find that the decision of the Hon'ble Madras High Court in the case of Sutherland Global Services Pvt. Ltd. is not applicable in the present case because the said decision was on the issue whether cess can be transitioned into GST or not? Whereas the issue in the present case is whether unutilized Cenvat credit of Education Cess and Secondary and Higher Education Cess could be claimed as refund under Section 11B of the Central Excise Act, 1944? Therefore, in view o....
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....7 (353) E.L.T. 417 (Raj.), Welcure Drugs & Pharmaceuticals Ltd. v. CCE - 2018 (15) G.S.T.L. 257 (Raj.) has formed similar view. High Courts have held that judicial discipline is required to be maintained; Tribunal cannot distinguish High Court judgments and is bound by High Court judgments. However, Larger Bench of Bombay High Courts in the case of Gauri Plasticulture (supra) has formed a different opinion. It is true that judgment cited by Counsel for the Revenue has been delivered by a Bench of three judges of Bombay High Court, nonetheless, as per judicial discipline we cannot ignore judgment of this Court and take contrary view. We do not find any fault in the judgment of this Court in the case of Rama Industries as well judgments delivered by Rajasthan and Karnataka High Courts, thus we do not deem it fit to disagree with judgment of this Court and refer the matter to Larger Bench. ........." 21. Shri O.P. Bisht, Learned Authorised Representative appearing for the Department has, however, placed reliance upon the decision of a Learned Member of the Tribunal in Bharat Heavy Electricals Ltd., wherein it has been held as follows : Learned Departmental R....
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....fund of unutilized Cenvat credit which is the question in dispute. In view of the above, I find that there is no legal provision under which the assessee's appeal could be entertained." 22. The aforesaid decision of a Learned Member is contrary to the Division Bench judgment of the Tribunal in Bharat Heavy Electricals and was also distinguished by the Tribunal in Kirloskar Toyota. 23. Learned Authorised Representative of the Department also placed reliance upon the decision of the Rajasthan High Court in Banswara Syntex Ltd. The Rajasthan High Court observed as follows : "22. Even while amending the Rules of 2004 and substituting the proviso to Rule 3(7)(b) of the Rules of 2004, despite dispensing with the Education Cess and Secondary and Higher Secondary Education Cess, the Central Government has not thought it appropriate to provide for refund of the amount of such Cess, lying unutilized. In this view of the matter, in our considered view, the rule making authority has consciously not provided for refund of Cenvat credit. 23. It is noteworthy that an assessee is entitled to take Cenvat credit in respect of the inputs, immediately on their arriv....
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....the Act of 1944, even while rejecting the assessee's claim. 27. In view of the discussion foregoing, we are of the considered opinion that the Tribunal has committed no error of law in holding that the appellant cannot claim cash refund or encashment of the unutilized and unavailed amount of Education Cess and Secondary and Higher Secondary Education Cess, lying in its credit." 24. It is, therefore, seen that there are conflicting decisions of the Karnataka High Court and the Punjab and Haryana High Court on the one hand and the Rajasthan High Court on the other hand. The decision of the Karnataka High Court in Slovak India was affirmed by the Supreme Court. It would, therefore, be appropriate to follow the view taken by the Karnataka High Court and the Punjab and Haryana High Court. 25. Learned Authorised Representative for the Department also placed upon the decision of the Delhi High Court in Cellular Operators Association. This judgment was rendered in a Writ Petition that had been filed for quashing the notification dated 29-10-2015 and for a direction that the credit accumulated on account of cess should be allowed to be utilised for payment of serv....