TaxTMI 
TaxTMI 
2024 (7) TMI 541
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.... [SAD] in terms of section 142(3) of the Central Goods and Services Tax Act, 2017 [the CGST Act] subject to verification of unjust enrichment. 2. Shakti Pumps is engaged in the manufacture of submersible pumps, power driven pumps, centrifugal pumps and solar pumping systems. It is registered with the Good and Service Tax department, but before the introduction of the CGST Act it was registered with the Central Excise department. 3. Shakti Pumps was availing CENVAT credit of duty paid on the input goods as well as on the service tax paid on input services which were used in manufacture of the final products in terms of rule 3 read with rule 4 of the CENVAT Credit Rules, 2004 [the 2004 Credit Rules] and it also filed the statutory monthly ER-1 returns. 4. The Central Government, from time to time, publishes Foreign Trade Policy [FTP] under the powers conferred upon it by section 5 of the Foreign Trade (Development & Regulation) Act, 1992. The objective of the FTP is to make exports from India more competitive. In furtherance of this objective, Chapter 4 of the FTP provides for various Duty Exemption Schemes such as the Advance Authorization [AA] Scheme and Duty-Free Import A....
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....ed in this conditions and the additional duty of customs so paid shall be eligible for availing CENVAT Credit under the CENVAT Credit Rules, 2004; xxxxxxxxx" (emphasis supplied) 6. To avail the said benefit, Shakti Pumps applied for and was issued five AA's for import of raw materials and components such as solar pump drive, stainless steel sheets, coils and CRNGO. The items imported under the aforesaid AA's without payment of duty were, however, not fully consumed by Shakti Pumps in the manufacture of the finished export goods within the period specified in the respective AA's. 7. On account of shortfall in the fulfillment of its export obligation within the time specified in AA, Shakti Pumps suo-motu discharged the appropriate CVD and SAD amounting to Rs. 1,35,10,358/- through several challans. Shakti Pumps also suo-motu paid CVD and SAD amounting to Rs. 1,10,44,821/- on import of solar pump controllers, solar pump inverter, frequency inverter and solar pump drive due to objections having been raised by the department. 8. The Goods and Services Tax regime was implemented w.e.f. 01.07.2017 wherein taxes such as Central Excise and Service Tax were subsumed into....
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....1, but the same was not availed. 13. Shakti Pumps filed a detailed reply dated 21.10.2019 contesting the allegations made in the show cause notice. Reliance was also placed on various adjudication orders as well as orders passed by Commissioner (Appeals) wherein cash refund of CVD and SAD paid after 01.07.2017 was granted under section 142(3) of the CGST Act read with section 11B of the Excise Act. 14. The Assistant Commissioner, by order dated 11.02.2020, however, rejected the refund claims. 15. Feeling aggrieved, Shakti Pumps filed an appeal on 09.06.2020 before the Commissioner (Appeals) and the Commissioner (Appeals), by order dated 08.07.2020, allowed the refund of Rs. 2,45,55,179/- in cash. The Commissioner (Appeals) recorded a finding that there could be no doubts that Shakti Pumps was eligible for CENVAT credit and, therefore, the Assistant Commissioner committed an illegality in rejecting the claim. The Commissioner (Appeals), therefore, held that Shakti Pumps would be entitled to refund in cash of CVD and SAD in terms of section 142(3) of the CGST Act, subject to verification of unjust enrichment by the sanctioning officer. 16. It is stated that pursuant to th....
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....f the Central Excise Act; (vi) Allowing CENVAT credit of duties paid in case of default is against the intention and stipulation of the notification. Had the intention been to allow CENVAT credit, the legislature would have provided for such a provision in the notification. In this Connection reliance has been placed on the judgment of the Supreme Court in Union of India vs. Ind-Swift Laboratories Ltd [2011 (265) E.L.T. 3 (S.C.)]; (vii) Shakti Pumps had not complied with the provisions of the 2004 Credit Rules and so it would not be eligible to avail CENVAT credit and refund thereof; and (viii) The transitional provisions under section 142 of the CGST Act in respect of CENVAT credit would be applicable only when CENVAT credit was taken prior to 30.06.2017. 19. Ms. Sukriti Das, learned counsel appearing for the respondent, however, contended that Shakti Pumps was entitled to claim cash refund of CENVAT credit paid under the existing law in terms of section 142(3) of the CGST Act and made the following submissions to support this contention: (i) In terms of the provisions of rule 3(1) read with rule 9 of the 2004 Credit Rules, as applicable prio....
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....(1) of section 139 is reproduced below: "139 (1) On and from the appointed day, every person registered under any of the existing laws and having a valid Permanent Account Number shall be issued a certificate of registration on provisional basis, subject to such conditions and in such form and manner as may be prescribed, which unless replaced by a final certificate of registration under sub-section (2), shall be liable to be cancelled if the conditions so prescribed are not complied with." 27. Section 140 of the CGST Act came into force on 01.07.2017. Sub-section (1) of section 140 is reproduced below: "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: (i) where the said amount of credi....
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....osed of in accordance with the provisions of existing law and if any amount of credit becomes recoverable as a result of such appeal, review or reference, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act." 29. Chapter XXI of the CGST Act deals with Miscellaneous matters. Section 173, which is contained in Chapter XXI, deals with amendment of the Finance Act. It came into force on 01.07.2017 and is reproduced below: "173. Amendment of Act 32 of 1994 Save as otherwise provided in this Act, Chapter V of the Finance Act, 1994 shall be omitted." 30. Section 174, which also came into on 01.07.2017, deals with repeal and saving. Sub-section (1) and clause (f) of sub-section (2) are reproduced below: "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 (Exci....
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....Rules, as applicable prior to 01.07.2017, Shakti Pumps was entitled to claim CENVAT credit of CVD and SAD paid on imports. In response to the query sought by the Assistant Commissioner in the letter dated 30.08.2019 Shakti Pumps explained that out of the thirteen payments of CVD and SAD through GAR-7 challans, only two challans were within the period when GST Tran-1 was open on the common portal, but due to human error the two payments could not be included. As the 2004 Credit Rules were framed under the Excise Act, the appellant could not have claimed CENVAT credit in respect of the input service under the provisions of the CENVAT Credit Rules after 01.07.2017 as they ceased to exist. 34. Section 142, as noticed above, deals with Miscellaneous Transitional Provisions. Sub-section (3) provides that every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT credit or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of the existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of....
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....l in fulfilment of Export Obligation under the aforesaid Advance Licences Balance due to which balance quantity of Solar Pump Drive, DCMCB, Stainless Steel Sheet/Coils and CRNGO which was not utilised (imported in excess), we had paid CVD & SAD of Rs. 1,35,10,358.00/- paid by us, vide the above mentioned Challans. 6. We can apply for Refund of CENVAT Credit, which, we have earned against payment of CVD and SAD but after 01.07.2017, such CENVAT Credit, could not be availed and Refund for the said Credit Facility, is applied in terms of Sections 142(3) and 142(6)(a) of the CGST Act, 2017. xxxxxxxxx 11. From the reading of the Transitional Provisions, under CGST Act, 2017, it is clear that Refund of CENVAT Credit, accruing as per earlier Law, is to be paid in Cash. 12. We would also like to place on record that the Assistant Commissioner, Central GST & Central Excise, Division-VII, Vadodara-l Commissionerate, vide Order-in-Original No., Div-Vii/41/RR Kabel/Ref/17-18, dated 20.06.2018 (ANNEXURE:1, hereto), has granted Refund in Cash, under the provisions of Section 142(3) of CGST Act, 1944, read with, Section 11-B of Central Excise Act, 1944, to M/S.....
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....ustoms Act and the AA authorisation merely provided that in case the conditions are not satisfied, CVD and SAD, which otherwise were required to be paid, had to deposited with interest. Learned authorised representative, therefore, is not justified in contending that CVD and SAD were not paid under the existing law. 42. Learned authorised representative also submitted that CENVAT credit could be availed only if the notification allowed it to avail CENVAT credit. 43. It is also not possible to accept this contention of the learned authorised representative appearing for the department. Shakti Pumps was entitled to avail CENVAT credit under the 2004 Credit Rules and it did so. There was no necessity for a clause to be inserted in the notification that CENVAT credit would also be available if CVD and SAD are subsequently paid because the conditions of the notification have not been satisfied. 44. Reliance placed by the learned authorised representative on the judgment of the Delhi High Court in Rai Agro Industries is misplaced. The question that fell for consideration before the High Court in the Writ Petition filed by Rai Agro Industries was whether the demand made by the de....
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.... at the rate stipulated for the imports made by it. A concessional rate was, however, applied to the said imports subject to the petitioner's satisfying the requirements stipulated for the said benefit. No sooner it is found that the petitioner has failed to perform its export obligation which was one of the conditions for applying a concessional rate of duty, the exemption would cease to be effective and the liability to pay the duty at the rate ordinarily applicable re-emerge. Consequently non-payment of the differential would attract payment of interest in terms of the statutory provisions referred to above." (emphasis supplied) 46. In the present case, it is not in dispute that Shakti Pumps had not only deposited CVD and SAD on account of non-fulfilment of the export obligation contained in the AA but had also paid interest. This decision would, therefore, not come to the aid of the department. 47. Learned authorised representative appearing for the department also placed reliance upon the judgment of the Supreme Court in Ind-Swift Laboratories to contend that in the absence of any stipulation in the notification, allowing CENVAT credit in case of default, wo....
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.... be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in a taxing statute so as to supply any assumed deficiency. xxxxxxxxxxxx" (emphasis supplied) 49. The said decision of the Supreme Court in Ind-Swift Laboratories would not be applicable in the present case. This decision merely holds that rule 14 of the 2004 Credit Rules cannot be read down and that interest can be claimed from the date of wrong availment of CENVAT credit. In the instant case, as noticed above, Shakti Pumps could claim refund of CENVAT credit in terms of the 2004 Credit Rules even if clause (iv) of the notification dated 01.04.2015 issued by the Central Government did not contain such a provision. In any view of the matter, this was not even the allegation made in the show cause notice that was issued to Shakti Pumps when the refund applications were filed. It is, therefore, not open to the department to raise this issue for the first time in this appeal. 50. Learned authorised representative also submitted that the provisions of section 142(6)(a) of the CGST Act were wrongly relied upon. 51. It is seen from the order passed by the Commissioner (....
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....17, the CENVAT Rules ceased to be in force and the claim under section 142(3) of CGST Act cannot be considered to be under the 'existing law' as the service tax was not paid in time but on 08.12.2017 after the CGST Act had come into force. xxxxxxxxxxx 16. In the present case, the appellant had deposited the short payment of service tax under the reverse charge mechanism in respect of import of service on 08.12.2017, after the time period prescribed for filing the last ST-3 Return had expired. This amount was, therefore, not reflected in the ST-3 Return. The CGST Act came into force w.e.f. 01.07.2017. The appellant, therefore, could not claim the transition of the input credit under section 140 of the CGST Act. The appellant could not also avail CENVAT credit under the CENVAT Rules as they were no longer in force after the introduction of the CGST Act. 17. It is for this reason that the appellant filed an application under section 142(3) of the CGST Act claiming refund of the amount of CENVAT credit paid by the appellant. This claim of the appellant was rejected by the Deputy Commissioner by the order dated 24.04.2019 and the appeal filed by the appellant ....
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....filled export obligation against Advance Authorization, under Section 142(3) of the CGST Act, 2017. The assessee-appellant could not fulfil its export obligation in some cases, as per annexure to its request for refund dated 16-5-2019, owing to lack of export orders, which prompted the appellant to pay off the Customs Duties on account of short export and thereby close the export obligation under the above Advance Licences. It is also an admitted fact that the above Customs Duty was paid along with appropriate interest. It is the case of the appellant that since the inputs imported by it were used in the manufacture of final products on which Central Excise Duty/GST, as the case may be, was paid/to be paid, they were eligible for refund of CVD and SAD paid. Further, post the introduction of GST, the appellant having left with no option to claim the above credit under the CENVAT Credit Rules with also no scope to report the same under Transitional Credit while migrating to GST, the refund in cash was claimed under Section 142(3) ibid. xxxxxxxxxxxxx 10. Thus, the availability of CENVAT paid on inputs despite failure to meet with the export obligation may not hold go....
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....eld: "12. Having considered the rival contentions, we find that the payment of CVD and SAD subsequently during the GST regime, for the imports made under advance authorisation prior to 30.06.2017 is not disputed. It is also not disputed that the Appellant have paid the CVD and SAD during the period August 2018 to March 2019, by way of regularisation of the shortfall in fulfilment of export obligation. We find that Section 142(3) read with 142(5) of the GST act, provides that every claim for refund 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 disposed of in accordance with the provisions of the existing law and any amount eventually accruing to him, shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provision of sub-section (2) of section 11B of the Central Excise Act (unjust enrichment). 13. Further from a conjoint reading of subsection (3) (5) and (8A) of Section 142 of the CGST Act it is evident than that an assessee is entitled to claim refund of CVD and SAD paid ....