TaxTMI 
TaxTMI 
2025 (2) TMI 1173
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....se Tariff Act, 1985. For the purpose of payment of Central Excise duty on such manufactured final products and for compliance with the Central Excise statute they are registered with jurisdictional Central Excise authorities and are holding Central Excise Registration No. AABCO5420AEM001. The appellants avail CENVAT credit of duty/tax on inputs and input services used in provision of output services. The appellants have filed a refund application in the prescribed Form-R dated 29.06.2020for refund of Rs. 4,82,561/- being the closing balance of Education Cess and Secondary & Higher education cess lying as on 30.06.2017, which could not be transitioned as input credit under GST regime, on various grounds mentioned in their refund application. The said amount was initially carried forward by the appellants as transition credit under GST regime by filing TRAN-1 and also reflected in the ER-1 return filed for the period June, 2017. Subsequently, upon receiving a notice from the department on 10.07.2019 objecting to transitioning of such credit and that the same is not permissible in GST regime, the appellants had reversed the credit of Rs. 4,82,561/- by submitting revised GSTR-3B for Ju....
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....fore, explanations for 'Eligible Duties and Taxes' provided in Section 140 of the CGST Act 2017 does not apply to carry forward of CENVAT credit under Section 140(1) of the CGST Act 2017. Thus, in terms of Section 140(1), the appellants are allowed to transfer the closing balance of CENVAT credit as on 30.06.2017 to GST regime through filing of TRAN-1 form. As per CENVAT Rules, the eligible CENVAT credit to be transitioned covered EC, SHEC and KKC. Accordingly, in the Form TRAN-1, the appellants had included the amount of KKC in the amount of Cenvat credit to be transferred. However, subsequently vide CGST (Amendment) Act, 2018, Section 140(1) of the CGST Act was amended retrospectively with effect from 1st July 2017. Further circular dated 02.01.2019 clarified that in terms of amendment in section 140(1) of CGST Act, 2017 transition of cess credit is not allowed in the GST regime. Even after this amendment, the appellants were of the view that they are entitled for the transition of the credit of KKC. However, as an abundant caution, the appellants had reversed the credit of Rs. 4,82,561/- transitioned vide GST Form TRAN-1 pertaining to credit of KKC and also revised the returns v....
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....ployed like 'eligible duties' (term employed in Section 140 of the CGST Act) and 'CENVAT Credit' (term employed in Section 142 (3) of the CGST Act); which difference was also noted by the Hon'ble Madras High Court both by the single member and the Division bench. 3.6 In this regard, he cited the judgement of Hon'ble Supreme Court in the case of Eicher Motors (2002-TIOL-149-SC-CX-LB) and in Samtel India Ltd. (2003-TIOL-40-SC-CX) wherein it had been held that credit earned is vested right. In the cited case, he stated that the KKC credit is vested right which has been validly been earned by appellants and such right cannot be taken away with change in law unless specific provision which would debar from refund. 3.7 Further, learned Counsel also relied on the decision of the Tribunal in the case of Bharat Heavy Electricals Ltd (2020-TIOL- 1341-CESTAT-DEL) wherein it was held that Education Cess and Secondary & Higher Education Cess cannot be transferred to GST account and as they were lying unutilized in their CENVAT credit account on 30.06.2017, the appellant in that case was held to be entitled to claim the refund thereof. He also cited the order of the....
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.... requires,- ..... (48) "existing law" means any law, notification, order, rule or regulation relating to levy and collection of duty or tax on goods or services or both passed or made before the commencement of this Act by Parliament or any Authority or person having the power to make such law, notification, order, rule or regulation; Miscellaneous transitional provisions. Section 142. (1) Where any goods on which duty, if any, had been paid under the existing law at the time of removal thereof, not being earlier than six months prior to the appointed day, are returned to any place of business on or after the appointed day, the registered person shall be eligible for refund of the duty paid under the existing law where such goods are returned by a person, other than a registered person, to the said place of business within a period of six months from the appointed day and such goods are identifiable to the satisfaction of the proper officer: Provided that if the said goods are returned by a registered person, the return of such goods shall be deemed to be a supply. xxx ....
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....me shall be refunded to him in cash under the existing law, notwithstanding anything to the contrary contained in the said law other than the provisions of subsection (2) of section 11B of the Central Excise Act, 1944 (1 of 1944) and the amount rejected, if any, shall not be admissible as input tax credit under this Act. Repeal and saving. Section 174. (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) 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....." Central Excise Act, 1944 "Claim for refund of duty and interest, if any, paid on such duty. Section 11B. (1) Any person claiming refund of any duty of excise and interest, if any, paid ....
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....Central Excise; (c) 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; (d) the duty of excise and interest, if any, paid on such duty paid by the manufacturer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (e) the duty of excise and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (f) the duty of excise and interest, if any, paid on such duty] borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify:....." 5.2 Before I proceed with the present case in hand, the competency of the Tribunal in handling the orders passed under Section 142(2) of the CGST Act, 2017 in appeal before them, has been dealt by the Larger Bench of the Tribunal, and the reference made therein have been clarified in the Interim Order No. 40021/2023 dated 21.12.2023 in the case of Bosch Electrical Drive India Private Limited Vs. Commissi....
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....h the refund application of the appellants was held as not entertainable by the original authority which was upheld in the impugned order, is that the Section 142(3) of the CGST Act, 2017 allows refund of any amount paid under the 'existing law' i.e., CGST, Act, 2017 only, and not in respect of amount paid under Central Excise Act, 1944. Further, there is no provision under the CGST Act, 2017 for refund of any cess. 8. The relevant portion of the original order n the above aspect for ease of reference, is extracted and given below: "15. The basic issue in the present refund claim is whether the Education Cess & Secondary Higher Education Cesses, which is lying in the Cenvat Credit account of M/s Orient Cement Ltd. can be refunded to the claimant. As seen in the forgoing paras, due to insertion of Section 28 of CGST (Amendment) Act, 2018 which amended Section 140(1) of CGST Act 2017,the claimant had to reverse the amount of Rs. 482561/- which was claimed in Tran 1. Hence amount of Rs 482561/- were lying in the Cenvat Credit account of claimant for the month of June 2017. Now the question arises whether there is any provision in the CGST Act 2017,which enables the claiman....
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....visions of existing law i.e., Central Excise Act, 1944, except for the provisions of sub-section (2) of section 11B ibid. Thus, all the conditions of the requirements of Section 11B ibid as it remained under the existing law, other than those relating to Unjust Enrichment clause contained in Section 11B(2) ibid would apply, only if they are not contradictory to the provisions of Section 142(9)(b) of the CGST Act, 2017, in dealing with refund of 'CENVAT credit'. It is also on record, that there is no dispute with respect to fulfillment of unjust enrichment angle in the case of the present refund, as the authorities below have not raised any objection with respect to these. Further, the appellants have also submitted that the amount claimed as refund has not been passed to any other person and the amount of Rs. 25,52,385/- reversed has been shown in their books of accounts and the return filed with the department. 10.1 Further, upon introduction of GST regime, the transitional arrangements have been provided under Section 142 of CGST Act, to enable the CENVAT credit, if refundable, to be paid in cash to the eligible persons, as there was no way that such excess CENVAT credit could....
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....axation of goods and services in India has, hitherto, been characterized as a cascading and distortionary tax on production resulting in mis-allocation of resources and lower productivity and economic growth. It had also inhibited voluntary compliance. Therefore, it was necessary to replace the existing indirect tax system by a new regime which would foster the achievement of the following objectives viz., (a) The incidence of tax falls only on domestic consumption; (b) The efficiency and equity of the system is optimized; (c) There should be no export of taxes across taxing jurisdictions; (d) The Indian market should be integrated into a single common market; (e) It enhances the cause of cooperative federalism. Accordingly, a well-designed 'value added tax' on all Goods and Services (GST) has been introduced as the most elegant method of eliminating distortions and taxing consumption. Under this GST structure, all different stages of production and distribution can be interpreted as a mere tax pass through, and the tax essentially 'sticks' on final consumption within the taxing jurisdiction. It is also of common knowledge that GST subsumes a number of existing indirect taxes which....
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....aw in the backdrop of above discussions on migration from earlier taxation regime to new GST regime, and the same is not proper and therefore denial of cash refund solely on the basis that there exists no provision under CENVAT statue for cash refund, is not legally sustainable. 11.5 I further find support for my above observations about the basis of CENVAT as input tax neutralisation scheme from the following judgements of the Hon'ble Supreme Court. The object of the input credit scheme had been explained by the Hon'ble Supreme Court in the case of CCE Vs. Dai Ichi Karkaria Ltd. 1999 (112) E.L.T. 353 (S.C.) as follows: "17. It is clear from these Rules, as we read them, that a manufacturer obtains credit for the excise duty paid on raw material to be used by him in the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgement thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provision in the Rules which provides for a reversal of the credit by the excise authorities except where it has been illegally or irregularly taken, in whi....
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....ing credit for the duty paid on the inputs. 11.7 From the detailed discussions as above, it is reasonable to conclude that when the Central Excise Act, 1944 amongst other laws relating to old tax regime was repealed by Section 174 of the CGST Act, 2017 and that the CCR is also being superseded vide Notification No.20/2017-C.E. (N.T.) dated 30.06.2017, by the Central Government for smooth implementation of transfer to GST regime in indirect taxation, I find that the provisions of Section 142 of the CGST Act, 2017 are sufficient to provide for the tax administration for sanction of cash refund in circumstances stated therein, and I find that there is no need and it is not legally feasible to make any specific provision in CENVAT statute itself, for enabling cash refund of excess CENVAT credit relating to earlier regime while moving to the new GST regime. 12.1 I further find that the issue of reversal of excess CENVAT credit under the transitional arrangement as provided under Section 142 of CGST Act, 2017 has already been addressed by the Co-ordinate Bench of the Tribunal in the following cases, and it was held that cash refund of such excess CENVAT credit is permissible. The r....
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....ion 142(6)(a) of the CGST Act that such CENVAT Credit amount shall be paid to the Appellant in cash, it can't avail dual benefits once order of this Tribunal is duly complied by the Respondent Department by the closing date of the window. THE ORDER 10. The appeal is allowed and the order passed by the Commissioner of Central Tax, Central Excise & Service Tax (Appeals), Raigarh vide Order-in-Appeal No. MKK/466/RGD APP/2018-19 dated 07.02.2019 is hereby set aside and the Appellant is eligible to get refund of Rs. 11,04,057/- paid against CVD and SAD which applicable interest, if any, within a period of two months of communication of this order." 12.2 The relevant paragraphs in the Final Order No. 42467/2021 dated 16.12.2021 in the case of M/s Circular Flow Technologies India Pvt. Limited Vs. Principal Commissioner of GST & Central Excise, Coimbatore are extracted and given below: "11. Section 142 (3) of GST Act provides how to deal with claims of refund of service tax of tax and duty / credit under the erstwhile law. It is stated that therein that such claims have to be disposed in accordance with the provisions of existing law and any amount eventually accrui....
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....6)(a) of Section 142, every proceeding of appeal, review or reference relating to a claim for Cenvat credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law, and any amount of credit found to be admissible to the claimant shall be refunded to him in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of Section 11B of the Central Excise Act, 1944. Further I find that the appellant had already debited the entire amount in their Cenvat account and the said amount was debited under a bona fide belief that the cash refund would be sanctioned to them and the very fact that Cenvat credit was never disallowed, hence the Cenvat credit lying in the balance of Cenvat account are liable to be refunded in cash to the appellant as per the provisions of sub-section (3) or sub-section (6)(a) of Section 142 of CGST Act. This issue is no more res integra and has been held in favour of the appellant by various decisions cited supra. Hence, by following the ratio of the said decisions, I am of the considered view th....
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....wing reasons. Firstly, it is not the case of refund arising on account of denial of any exemption or setting aside of any demand in the SCN, but refund arising on account of the excess CENVAT credit paid by the appellants, which is in excess of the CENVAT credit that is required to be paid in terms of the Rule 6(3A) of the CCR and specifically allowed to be adjusted in terms of clause (f) of Rule 6(3A) of the CCR. Secondly, the transition provisions referred to therein are regarding credit earned by a manufacturer under the CENVAT Credit Rules, 2002 and how they will be allowed to be utilised in accordance with CENVAT Credit Rules, 2004. In the present case, the existing indirect tax law relating to levy of Central Excise duty i.e., Central Excise Act, 1944 has been repealed and law relating Service Tax in Chapter V of the Finance Act, 1994 have been suitably amended to pave way for implementation of new GST regime. Hence, I find that the judgement in the case of Gauri Plasticulture P. Ltd. (supra) is not applicable to the present factual matrix of the case. 12.5 Further, I have also gone through the various case laws cited by both sides to support their respective stand. Howeve....
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....y, 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 existing law and anyamount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 (1 of 1944): Provided that where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse: Provided further 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 this Act. ********************************" 11. In our view, Section 142(3) of the Act is very clear in as much as, it says " 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 .............. and any amount eventually accruing ........ shall be paid in cash ......". It is very widely worded in as m....
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....ible refund for effecting cash refund of CENVAT credit and thus the same is not admissible. I find that in these decisions the issues have not been examined in detail with respect to legislative provisions, as discussed herein above and hence those decisions are distinguishable to this extent with the present case. 12.7 I also find that the Co-ordinate Bench of this Tribunal in the Final Order No.70111/2022 dated 29.04.2022 in Excise Appeal No.70496 of 2019 had on the basis of decision in the case of Emami Cement (supra), have held that rejection of refund of accumulated balance amount of credit on education cess, secondary and higher education cess and Krishi kalyan cess by original authority and upheld by the Commissioner (Appeals-Thane) cannot be legally sustained and set aside the impugned order of rejecting the appeal filed by the appellants in that case. 12.8 In this regard, I find that Hon'ble Supreme Court have held in the case of Union of India Vs. Kamlakshi Finance Corporation Limited - 1991 (55) E.L.T. 433 (S.C.) that judicial discipline is required to be followed in proper administration of tax laws. The relevant paragraph of the said order is as follows: ....