TaxTMI 
TaxTMI 
2024 (4) TMI 108
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....he 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)], 2.1 He further submits that pursuant to the CGST Amendmen....
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.... 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 the Tribunal which held that the assessee is not liable to reverse the cenvat credit in respe....
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....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 equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for use in the manufacture of the said final product and is ....
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.... 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 2011 (268) E.L.T. 49 (Kar.) for this decision. 4.3 In the case of Ramco International vs. CCE, Jalandhar - 2014 (304) ELT 434 (Tri.-Delhi), the similar issue was decided by this Tribunal wherein ....
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....erse 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., after the period involved in the present appeals. 5. In view of the above, I set aside the impugned order and allow all the three appeals with consequential relief to the appellants." 4.4 From the above judgments one of which i.e. in the....
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....B 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 not utilize the same. We agree with Learned Counsel of the appellant that the credits earned were a vested right in terms of the Hon'ble Apex Court judgment in Eicher Motors case and will not extinguish with the change of law unless there was a specific provision which woul....
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....ional 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 of the contradictory decisions of various High Courts, this Tribunal is bound to follow the decision of the jurisdictional High Court and the jurisdictional High Court has held in the case of Slovak India Trading Company (cited supra) which has been relied u....
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....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 to refund of the amount deposited if the assessee has gone out of the Modvat Scheme or their unit is closed. Aggrieved against the order of the Tribunal, Revenue filed C.E.A. No. 5/2006 in the High Court of Karnataka at Bangalore. The High Court by its impugned order has affirmed the order of the Tribunal and dismissed C.E.A. No. 5/2006 filed by the Revenue. Learned AS....
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....dits. 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 Electricals. 18. In Kirloskar Toyota, the Tribunal while examining whether refund claim of accumulated balance of unutilised credit of cess available in the books, can be refunded under Section 11B of the Central Excise Act, 1944 [the Excise Act] and held, in view of the aforesaid Division Bench decision of the Tribunal in Bharat Heavy Electricals, as also the decisions of the Supreme Court and the Karnataka High....
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....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 of the contradictory decisions of various High Courts, this Tribunal is bound to follow the decision of the jurisdictional High Court and the jurisdictional High Court has held in the case of Slovak India Trading Company (cited supra) which has been relied upon by the Division Bench of the Delhi Tribunal in the case of Bharat Heavy Electricals Ltd. has categorically held that refund can be granted of the cesses viz. Education Cess and Highe....
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.... 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 Representative draws "4. the attention of the Bench to the judgment of the Larger Bench of the Hon'ble High Court of Bombay in the case of Gauri Plasticulture Pvt. Ltd. [2019-TIOL-1248-HC-MUM-CX-LB] on this issue in which questions framed by the Hon'ble Larger Bench were as follows : "(a) Whether cash refund is permissible in terms of clause (c) to the proviso to section 11B(2) of the Central Excise Act, 1944 where an assessee is unable to utilize credit on inputs? (b) Whether by exe....
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.... 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 arrival in his factory or premises as provided in Rule 4 of the Cenvat Credit Rules, 2004. Hence, it is the Cenvat Credit Rules, 2004, which bestows upon an assessee, a right to claim credit of duty or cess paid on its inputs or input services. Such right accrues, fructifies and crystallizes on the date of procurement of the goods or services, but the same is available only to the extent of availing credit of such tax, in accordance with the existing conditions and provisions prevailing on that date. 24. In other words, Cenvat credit lying in an assessee's....
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..... 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 service tax leviable on telecommunication services. The submissions of the petitioner was that the unutilized amount of cess, after it was exempted w.e.f. 1-3-2015, should be permitted to be utilized for payment of tax on excisable goods and taxable services as it was subsumed in the Central Excise duty which had been raised in 2015. The High Court rejected this contention. 26. In the present case, the plea of the appellant is not for adjustment of the credit on cess amount against payment of excise duty or service tax, but it is for refund of credit accumulated on account of payment of tax ....