TaxTMI 
TaxTMI 
2023 (2) TMI 1297
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....the manufacture of exported goods. However at the time of redemption of the advance authorizations during the period April 2018 and May 2018, it was observed that there was a shortfall in the fulfillment of export obligations. Accordingly, the appellants paid the amount of customs duty including CVD (Rs.26,18,984/-) and SAD (Rs. 9,79,363/-) forgone on the quantities of duty free imported raw material proportionate to the shortfall in the fulfillment of export obligation vide several challans during the period April 2018 and May 2018. 2.3 Appellant claims that prior to 01.07.2017, they were entitled to avail Cenvat credit on the CVD and SAD paid for regularization of unutilized duty-free inputs imported against the advance authorization Scheme in terms of Rule 3 read with Rule 9 of the Credit Rules. However, post implementation of the GST (w.e.f. 1.7.2017), there is no specific provision for availing credit of CVD and SAD paid post 1.7.2017. In view of transitional provision i.e., Section 140(1) of CGST Act, 2017, the credit lying in the ER-1 return on 30.6.2017 was allowed to be carried forward in GST. However, there is no specific provision for transfer of credit of CVD and SAD....
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....ules, 2004 were not in vogue, the right of the appellants to claim credit on such payment is saved. Therefore, the appellants is entitled to claim credit and consequent refund of the said amount under Section 142(3) of the CGST Act. • Cenvat Credit is a vested and indefeasible right of the appellants. Vested right cannot be taken away by introduction of new tax regime as has been held in Adfert Technologies Pvt Ltd 2019 (11) TMI 282 - P&H High Court]. Department SLP was dismissed by the Apex Court as reported in [2020 (3) TMI 188 - SC]. • Section 142(3) specifically provides to claim refund of credit paid under existing regime. Therefore, the appellants are entitled for refund in cash under Section 142(3). • Reliance is placed on following decisions of CESTAT in support of their claim to refund o New Age Laminators Pvt. Ltd [2022 (3) TMI 748 - CESTAT DELHI] o Flexi Caps & Polymers Pvt. Ltd. [2021 (9) TMI 917 - CESTAT DELHI] o Mithila Drugs Ltd. [2022(3) TMI 58 - CESTAT NEW DELHI] o ITCO Industries Ltd. [2022 (6) TMI 1040 - CESTAT CHENNAI] o Clariant Chemicals India Ltd. [2022 (10) TMI 796- CESTAT MU....
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....course of arguments. 4.2 Impugned order records the following findings/ reason for upholding the rejection of refund claim filed by the appellant: "2.1 The adjudicating authority rejected the refund claim on the following grounds: - i) Section 142(3) mandates the sanction of refund as per the provisions given under sub-section (2) of section 11B of the Central Excise Act whereas the subject refund claim filed by the appellant does not fall under the provisions of Section 11B(2), sub section(a), (b), (d), (e) and (f). In respect of Section 11B(2) subsection (c), there is no provision under the CENVAT Credit Rules 2004, Central Excise Act, 1944 and Central Excise Rules, 2002 which allows refund of CVD and SAD paid due to non-fulfillment of export obligation observed during the assessment of advance authorization. ii) Customs duties paid by the assesses are by compulsion when they realized that they would not be able to fulfill export obligation proportionately for imports under the said advance authorization only on receipt of demand note from DGFT. Since the liabilities were discharged only after demand was raised by DGFT, therefore fault is not bonafid....
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....at, every claim of refund filed by any person of any cenvat credit, duty interest or any other amount paid under the existing law shall be disposed of in accordance with the provisions of existing law and if the said amount accruing to him en the same shall be paid in cash. Thus it is important to find out whether the appellant is eligible for refund claim under the existing law. I find that under existing laws in the era of Central Excise regime, matters related to refund of Cenvat credit was dealt under Rule-5 of Cenvat credit Rules, 2004 read with section 11B of the Central excise act, 1944. The provision of Rule -5 of the CENVAT Credit Rules, 2004 is as under: RULE-5- Refund of CENVAT Credit- (1) A manufacturer who clears a final product or an intermediate product for export without payment of duty under bond or letter of undertaking, or a service provider who provides an output service which is exported without payment of service tax, shall be allowed refund of CENVAT credit as determined by the prescribed formula subject to procedure, safeguards, conditions and limitations as may be specified by the Board by notification in the Official Gazette: 6.1 I find t....
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....f revenue, since refund of Cenvat credit is only permissible in case of export of goods and for no other reason whatsoever that may be. I find that no injustice or hardship can be raised as plea to claim refund in absence of statutory mandate as claim of refund is not a marker of right unless vested by law. I also find that the above-said order of Commissioner(Appeal) relied upon by the appellant is not binding upon me. I place my reliance on the judgement of Hon'ble CESTAT Mumbai ne case of Comteck Lac oratories Vs CCE. Mumbai reported in 2000 (118) ELT 30 (TriMum) wherein it was held that "We find that the Commissioner (Appeals) has made an error in holding that the view held by his predecessor was binding on him in the same circumstances an order of the superior format would be binding on the Commissioner (Appeals) but his freedom to critically examine his predecessor's finding cannot be taken away. The learned Commissioner (Appeals) could have extracted his predecessor's findings and could have agreed therewith and then dismissed the appeal before him. In not doing so, he has not applied his mind to the facts before him. This order therefore, cannot be sust....
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....laim was in dispute before any authority, tribunal or court of law. The amounts sought as refund was paid by the appellant as directed by the DGFT for the redemption of the Advance Authorizations issued to the appellant. Admittedly appellant failed to fulfill the export obligations as per the advance authorizations issued to them within the stipulated time of eighteen months from the date of advance authorization. From the above table it is also evident that in all cases except for the case at S No 4, the stipulated time for completion of export obligation was over much before the date of introduction of GST regime. Appellant themselves had not opted for payment of the duties foregone, and delayed the payment of the duties due from them to later date in 2018. They paid the duties due along with the interest due. 4.5 The appellants claim that they are entitled to cash refund of the above amounts paid subsequently under the head of CVD and SAD, as they have paid these duties against the goods imported by them much before the introduction of GST Regime. The scheme of the erstwhile CENVAT Credit has been made in terms of the Section 37 (2) () of the Central Excise Act,1944 which is ....
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.... under section 3 of the Customs Tariff Act; or It is well evident that on the date of challan evidencing the payment of duty against which the appellants claim the CENVAT Credit, is after 1st July 2017, the date when the CENVAT Credit Scheme was rescinded. In absence of any scheme of CENVAT Credit Scheme on the date of payment of duty as above the claim to CENVAT Credit cannot be there. Indirectly by claiming that the they are not in position to claim CENVAT Credit, appellant has sought for the refund of the duties paid by them for nor non fulfillment of the obligation under advance authorization issued to them. Indirectly they intend claim the refund of the amount which is otherwise inadmissible to them and following is settled position in law: a. Devendra Kumar [(2013) 9 SCC 363] 23. More so, if the initial action is not in consonance with law, the subsequent conduct of a party cannot sanctify the same. "Subla Fundamento cedit opus"- a foundation being removed, the superstructure falls. A person having done wrong cannot take advantage of his own wrong and plead bar of any law to frustrate the lawful trial by a competent Court. In such a case the legal maxim N....
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....l Excise Act, 1944. 4.7 Similar view has been expressed by the Hon'ble High Court of Jharkhand in case of Rungta Mines [Order dated 15.02.2022 in WP No 2245/2020, (2022 (2) TMI 934 Jharkhand High Court)] wherein interpreting the provisions relied upon by the Appellant, following has been held: "Interpretation of section 142(3) read with section 140(1), 140(5) and section 174 of CGST Act vis-a vis the facts of this case. 39. The relevant portions of the aforesaid sections as relied upon by the learned counsel for the petitioner during the course of arguments are as under. Section 140 (1) and (5) of the CGST, Act reads as under:- 140. (1) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT Credit of eligible duties carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law within such time and in such manner as may be prescribed: PROVIDED that the registered person shall not be allowed to take credit in the following circumstances, namely:....
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....d in this Act, Chapter V of the Finance Act, 1994 shall be omitted. 1 174. Repeal and saving (1) Save as otherwise provided in this Act, on and from the date of commencement of this Act, the Central Excise Act, 1944 (1 of 1944) (except as respects goods included in entry 84 of the Union List of the Seventh Schedule to the Constitution), the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955), the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Additional Duties of Excise (Textiles and Textile Articles) 26 Act, 1978 (40 of 1978), and the Central Excise Tariff Act, 1985 (5 of 1986) (hereafter referred to as the repealed Acts) are hereby repealed. (2) The repeal of the said Acts and the amendment of the Finance Act, 1994 (32 of 1994) (hereafter referred to as "such amendment" or "amended Act", as the case may be) to the extent mentioned in the sub-section (1) or section 173 shall not- i. revive anything not in force or existing at the time of such amendment or repeal; or ii affect the previous operation of the amended Act or repealed Acts and orders or anything duly done or suffered....
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....appointed 27 date apart from the refund applications filed on or after the appointed date. b. Further the refund application should be for refund of any amount of CENVAT Credit, duty, tax, interest or any other amount paid under the existing law. c. Such application filed before, on or after the appointed day is to be disposed of in accordance with the provisions of existing law. d. If any amount eventually accrues the same is to be refunded in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11-B of the Central Excise Act, 1944. e. It also provides that where any claim for refund of CENVAT Credit is fully or even partially rejected, the amount so rejected shall lapse. f. The second proviso provides that no refund shall be allowed of any amount of CENVAT Credit where the balance of the said amount as on the appointed day has been carried forward under the CGST Act. 41. Thus, section 142(3) of CGST, Act clearly provides that refund application with respect of any amount relating to CENVAT Credit, duty, tax, interest or any other a....
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....rders whose details have already been stated above. 44. Under the provisions of section 11B the right to claim refund was conferred not only to the assessee but also to such classes of applicants as notified by the central government and also covers situations arising out of judgements of courts and tribunals. On the appointed date there could be claims of refund of any amount of CENVAT Credit, duty, tax, interest or any other amount paid under the existing law in connection with which the applications for refunds were pending or time limit for claiming refund was yet to expire or may crystalize on account of any judgement of courts or tribunals in relation to pending litigations. These are some of the situations which would be covered by the miscellaneous transitional provisions as contained in section 142(3) of CGST, Act which would continue to be governed by section 11B(2) of Central Excise Act, 1944. 45. The provision of section 142(3) does not entitle a person to seek refund who has no such right under the existing law or where the right under the existing law has extinguished or where right under the new CGST regime with respect to such claim has not been ex....
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....ices" were received by the petitioner in the month of April 2017 and invoice was also generated in the month of May 2017. 49. In the peculiar facts of this case, the petitioner did not claim transitional credit but claimed the impugned amount of service tax on "port services" as credit in their ST-3 return which they were admittedly not entitled as they were assessee under service tax only on reverse charge mechanism and admittedly the "port services" availed by the petitioner was not covered under reverse charge mechanism. Thus, the petitioner on the one hand illegally took credit of service tax on "port services" as credit in their ST-3 return and on the 30 other hand filed application for refund of the same amount under section 142(3) of the CGST, Act which is certainly not permissible in law. The authorities have rightly considered these aspects of the matter also while rejecting the application for refund filed by the petitioner. 50. It is not in dispute that the petitioner has claimed the credit of service tax involved in the present case paid on "port services" as "input service" in ST-3 return filed on 22.09.2017, though they were not entitled to claim suc....
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....n the prescribed time and accordingly could have claimed transitional credit through TRAN-1 under section 140 of CGST, Act. Thus, late receipt of the original invoice which has been cited as the reason for failure to claim CENVAT Credit under the existing law and transitional credit under section 140(1) of the CGST, Act was wholly attributable to acts and omissions of the petitioner and its service provider of the "port services" and the respondent authorities had no role to play. The petitioner had failed to avail the opportunity to claim CENVAT Credit of service tax on port services in terms of the existing law read with section 140 of CGST, Act and had no existing right of refund on the date of coming into force of CGST, Act. The petitioner having not used the port services for export was not entitled to claim refund under the existing law. The petitioner was also not entitled to refund on account of the fact that the petitioner had already taken credit of the service tax paid on port services in ST-3 Return of service tax although admittedly the petitioner was not entitled to take such credit in ST-3 Return. On account of aforesaid three distinct reasons the petitioner was righ....
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....w and on the other hand violated the provisions of law while filing his service tax returns and claimed the amount as input service and thereafter filed his petition for refund on 28.06.2018 referring to Section 142(3) of the CGST Act. The petitioner never had a right to claim refund under the existing law and had failed to exercise their right to claim CENVAT Credit as per law and wrongly claimed the impugned amount as credit in Service Tax Return (S.T. 3 return). 55. In view of the aforesaid findings, I do not find any reason to interfere with the findings and reasons assigned by the adjudicating authority as well as the appellate authority rejecting the application for refund filed by the petitioner under section 11B of Central Excise Act read with Section 142(3) and 174 of CGST Act. The impugned orders are well reasoned orders calling for no interference. Accordingly, this writ petition is dismissed." 4.8 Appellant have relied upon various decisions of this tribunal which go contrary to the above referred decision of the Hon'ble High court of Jharkhand hence by having taken the view in line with the above decision of Hon'ble High Court I do not find any of these dec....
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....n, by setting aside the order rejecting the claim of refund made by the assessee and remanding the matter to the appellant for fresh consideration. The operative portion of the said order is extracted below for ready reference: "48. For all these reasons, this Court, having considered the peculiar facts and circumstances of the case, is inclined to dispose of these writ petitions with the following orders: "(i) That the impugned orders in these writ petitions are liable to be set aside, accordingly are set aside. As a sequel, the matters are remitted back to the respondents for reconsideration. While reconsidering the same, the authority concerned, who has to deal with the applications of the petitioners, shall consider and dispose of these applications under section 142(3) of the CGST Act, 2017. (ii) While reconsidering the said applications, the claim made by the petitioners need not be considered for the purpose of refund of the claim made by them. However, the said claim made by the petitioners can very well be considered for the purpose of permitting the petitioners to carry forward the accrued credit to the electronic credit ledger of the GST regime....
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....n the book of accounts of the of the persons registered under Central Excise Act, 1944 or VAT Act. Hon'ble High Court has directed that such person may be permitted to file or correct the Tran-1 already filed by them on or before 30th November 2019. The issue in the present appeal is not in respect of any such credit which was available in the book of accounts of the appellant on the appointed date i.e. 01.07.2017. Hence the said decision cannot be applied to the facts of present case. 4.12 In respect of the alternate submission made by the appellant relying on the decision of Hon'ble Karnataka High Court in case of Slovak India Trading Co Pvt Ltd [2006 (201) ELT 559 (Kar)] affirmed by Hon'ble Supreme Court by dismissing the SLP [2008 (223) ELT A 170 (SC)] filed by the revenue against the said order it is noted that a larger bench of Hon'ble Bombay High Court has observed as follows: "20. Thus, the narrow issue before us is whether cash refund is permissible when Cenvat credit is unutilised. 21. In this regard, a reference can usefully be made to the judgment of the Hon'ble Supreme Court setting out the fundamental legal principles. These are that in a fiscal s....
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.... to be credited to the fund. Even earlier, the amount used to be credited to the fund, but the proviso says that instead of being credited to the fund, it can be paid to the applicant if such amount in this case is relatable to refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made. The crucial words are that "the 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". If the excisable goods are not used as inputs in accordance with the rules made, to our mind, there is no question of any refund. Our view gets support and reinforcement from the language of the rules themselves. Mr. Patil relies upon Rule 5 of the Cenvat Credit Rules, 2004. That Rule reads as under :- "RULE 5. Refund of Cenvat credit. - Where any input or input service is used in the final products which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate products cleared for export, or used in providing output service which is exported, the CENVAT credit in respect of the input or input service so used shall be allowed to be ....
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....unt subject to such safeguards, conditions and limitation as may be specified by the Central Government by a notification. 24. The word input is defined in Rule 2(k) of the Cenvat Credit Rules, 2004 to mean all goods used in the factory by the manufacturer of the final product or all goods including accessories, cleared along with the final product, the value of which is included in the value of the final product and goods used for providing free warranty for final products or all goods used for generation of electricity or steam for captive use or all goods used for providing any output service. We are not concerned with the excluded portion, but the consistent thread is that input means all goods used in the factory by the manufacturer of the final product. In the situation that is presented before us and particularly in the central excise appeals at hand, it is evident that the order-in-original has been passed by accepting the plea that the assessee was availing Cenvat credit of duties paid on the inputs purchased and was utilising the same for payment of additional duties of excise on final products at the time of clearance of the same. According to the case of the as....
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....lusion of fuel input vis-a-vis non-fuel input would still fall in sub-rule (1). As stated above, sub-rule (1) is plenary, hence, it cannot be said that because sub-rule (2) is inapplicable to fuel input(s), CENVAT credit is automatically available to such inputs even if they are used in the manufacture of exempted goods." 26. This view follows that taken in the case of Maruti Suzuki Limited v. Commissioner of Central Excise, Delhi-III - (2009) 9 SSC 193 = 2009 (240) E.L.T. 641 (S.C.). In this judgment, the Hon'ble Supreme Court held as under :- "28. Coming to the statutory definition of the word "input" in Rule 2(g) in the CENVAT Credit Rules, 2002, it may be noted that the said definition of the word "input" can be divided into three parts, namely : (i) specific part (ii) inclusive part (iii) place of use Coming to the specific part, one finds that the word "input" is defined to mean all goods, except light diesel oil, high speed diesel oil and petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not. The crucial requirement, therefore, ....
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....nput is not contained in the final product, it would still be covered by the definition. These considerations have been made irrelevant by the use of the expression "goods used in or in relation to the manufacture of final product" which, as stated above, is the crucial requirement of the definition of "input". 38. In each case it has to be established that inputs mentioned in the inclusive part are "used in or in relation to the manufacture of final product". It is the functional utility of the said item which would constitute the relevant consideration. Unless and until the said input is used in or in relation to the manufacture of final product within the factory of production, the said item would not become an eligible input. The said expression "used in or in relation to the manufacture" has many shades and would cover various situations based on the purpose for which the input is used. However, the specified input would become eligible for credit only when used in or in relation to the manufacture of final product." 27. The attempt made to rely upon the transitional provision, particularly Rule 11 carries the case no further. Rule 11 of the Cenvat C....
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....ut service shall be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for providing the said service and is lying in stock or is contained in the taxable service pending to be provided, when he opts for exemption from payment of whole of the service tax leviable on such taxable service under a notification issued under section 93 of the Finance Act, 1994 (32 of 1994) and after deducting the said amount from the balance of CENVAT credit, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods, whether cleared for home consumption or for export or for payment of service tax on any other output service, whether provided in India or exported." 28. It is evident from a reading of the transitional provision that any amount of credit earned by a manufacturer under the Cenvat Credit Rules, 2002, as they existed prior to the 10th September, 2004 or by a provider of output service under the Service Tax Credit Rules, 2002 as they existed prior to 10th September, 2004 and remaining unutilised on that day shall be allowed a....
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....nd still on account of closure of the factory would not enable the assessee to claim refund of Cenvat credit. That such credit can be availed of provided the inputs are used and not otherwise is clear from the scheme of the rules to which we have made a detailed reference in the foregoing paragraphs. 31. The sheet anchor of Mr. Patil's arguments is the judgment of the earlier Division Bench of this Court and that is based on the view taken by the High Court of Karnataka. The High Court of Karnataka has not discussed the scheme of Cenvat credit in details. The South Zonal Bench of the CESTAT in Slovak India (supra) considered the case of refund of unutilised Cenvat credit on account of closure of the factory of the said Slovak India. The Commissioner (Appeals) took the view that there is no provision in Rule 5 of the Cenvat Credit Rules to grant cash refund. After being approached, what the CESTAT observed is that there is a consistent view taken by the Tribunal that such claim is eligible and the assessee can seek refund when it goes out of the Modvat scheme (predecessor of Cenvat) or the unit is closed. This is the reasoning in the Tribunal's order and though the appeal o....
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....ught before this Court in the case of Jain Vanguard (supra), this Court, relying upon the judgment in the case of Slovak India (supra) and the order in the Special Leave Petition, dismissed the Revenue's appeal. The aggrieved Revenue, carried the matter to the Hon'ble Supreme Court and the order passed on that Special Leave Petition reads as under :- "Delay condoned. We find no reason to interfere with the impugned order in exercise of our discretion under Article 136 of the Constitution. The Special Leave Petition is, accordingly, dismissed leaving the question of law open." 35. The Special Leave Petition was dismissed, but the question of law was expressly kept open. It is in these circumstances that we are not in agreement with Mr. Patil that the issue or the controversy before us stands concluded against the Revenue. The question of law was still open to be raised and equally examined by us. There is no question of judicial discipline in such matters. The counsel relied upon this principle of judicial discipline by inviting our attention to the judgment of the Hon'ble Rajasthan High Court in the case of Welcure Drugs and Pharmaceuticals Ltd. v. Commis....