TaxTMI 
TaxTMI 
2025 (6) TMI 1006
X X X X Extracts X X X X
X X X X Extracts X X X X
....ail CENVAT credit of duty/tax on inputs and input services used in manufacture of final products. The appellant had filed a refund application in the prescribed Form-R dated 11.03.2019 for refund of Rs.1,51,307/- being the closing balance of Education Cess and Secondary & Higher education Cess lying in their account as on 30.06.2017, which was not carried forward as transition credit under GST regime, on the various grounds mentioned in their refund application. The appellants in support of their claim for refund under Section 11B of the Central Excise Act, 1944 had furnished requisite documents along with such refund application submitted to the department. 2.3 The appellants had filed original ER-1, a monthly return for production and removal of goods and other relevant particulars including CENVAT credit, for the month of June 2017 on 07.07.2017, indicating total admissible CENVAT credit of Central Excise duty for an amount of Rs.7,31,376/- and total Cess amount of Rs. 1,51,307/-, before the jurisdictional Deputy Commissioner of Central Tax, LTU, Bangalore with whom the appellants were centrally registered. As the said authority had returned the refund application filed by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....x credit, such as closing balance of Cenvat Credit of ER-1 or ST-3 returns as on 30.06.2017, the Government had made separate transitional arrangements for input tax credit in Section 140 of CGST Act, 2017 read with Rule 117 of Central Goods and Services Rules, 2017, under which eligible balance of Cenvat Credit were allowed to be carried forward by filing GST Tran-01 application. Further, I find that the Govt. have not made any special provision for granting refund of closing balance of Cenvat Credit other than permit to carry closing balance of eligible input tax credit in TRAN-1 return. 14. The present refund claim is related to the of Education Cess and Secondary & Higher Education Cess lying balance in Cenvat Credit account as on 30.06.2017, which was filed on 01.04.2019. As such, I find that the present refund claim is hit by time bar as the same was not filed within one from the relevant date, as required under the provisions of Section 11B of Central Excise Act, 1944. ORDER 17.1 I hereby reject the refund claim amounting to Rs. 1,51,307/- (Rupees One Lakh Fifty One Thousand Three Hundred Seven Only) filed by M/s. Toyota Kirloskar Motor Pvt. Ltd., ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the refund is correctly denied to the appellant." 2.7 Being aggrieved with the above Order-in-Appeal dated 15.10.2020, being the impugned order herein, the appellants have filed this appeal before the Tribunal. 3.1 Learned Advocate appearing for the appellants had submitted that they had closing balance of education Cess and Secondary Higher Education (SHE) Cess as on 30th June, 2017, amounting toRs.1,51,307/- and the same was not carried forward in from TRAN-1 to GST under transitional provisions. Since the closing balance of Education Cess and SHE Cess could notbe utilized and also not permitted to be transitioned to GST, the appellants had requested for refund of the same. He stated that the appellants submitted an application to the Deputy Commissioner vide their letter dated 27.07.2018, as they were registered under the Bangalore, LTU in the pre-GST period. The concerned authority rejected the said claim on the ground that it was not filed in the prescribed From R. Accordingly, the appellants submitted the claim in the prescribed format vide letter dated 30.10.2018 to the Deputy Commissioner, Bangalore. The Deputy Commissioner vide letter dated 5.12.2018 returned the cl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....012-C.E. (N.T.) dated 18.06.2012. He further stated that it is pertinent to note that there is no provision in the newly enacted law i.e. GST that such credits would lapse. Thus, he claimed that merely by change of legislation suddenly the appellants could not be put in a position to lose this valuable right. 3.3 In this regard, he cited the judgement of Hon'ble Supreme Court in the case of Eicher Motors Ltd. Vs. CCE (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. 3.4 Further, learned Advocate 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 ref....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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 xxx xxx xxx (3) 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, shall be disposed of in accordance with the provisions of 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 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of any such application, the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise is satisfied that the whole or any part of the duty of excise and interest, if any, paid on such duty paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund: Provided that the amount of duty of excise and interest, if any, paid on such duty as determined by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to- (a) rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India; (b) unspent advance deposits lying in balance in the applicant's account current maintained with the Principal Commissioner of Central Excise or Commissioner of 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecovery of 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 the existing law. (3) Section 174(2)(f) of the CGST Act also provides that the repeal of the Central Excise Act under section 174(1) and amendment of the Finance Act under section 173 shall not affect any proceedings including that relating to an appeal instituted before, on or after the appointed day under the said amended Act or repealed Acts and such proceedings shall be continued under the said amended Act or the repealed Acts as if the CGST Act had not come into force and the said Acts had not been amended or repealed. (4) There is, therefore, no manner of doubt that an appeal against an order passed under section 142 of the CGST Act would lie to the Tribunal. (5) This view also gains support from the fact the legislative intent could not have been to deprive either an assessee or the Revenue from the right of an appeal since an appeal against an order passed under section 142 of the CGST Act would not lie to the Appellate Tribunal constituted under the CGST Act. (6) The Division Be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sitional arrangement wherein it has been specifically provided that such provisions apply as a non-obstanate clause whereby such provisions will have overriding effect, if anything to the contrary is contained under the provisions 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 142of the CGST Act, 2017, in dealing with refund of 'CENVAT credit'. 8.1 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 be used by the assessee in payment of tax on output service or duty on final products. I also find that the proviso (c) to Section 11B(2) ibid, cannot be read to state that refund of such excess CENVAT credit has not been provided under Rule 5 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xcess CENVAT credit paid by them, and specifically allowed to be refunded in terms of Section 142(3) of the CGST Act, 2017. 9.1 As the issue is relating to transitional provisions in moving from Central Excise duty and Service Tax regime to GST regime, where both the taxes though remain by nature as indirect taxes, the whole concept of its levy, the power drawn from the Constitution of India, enabling legislation being different, it is also worthwhile to see the background of the GST scheme and the see whether such cash refund of CENVAT credit, duty etc., during its migration to GST regime as provided under Section 142 of the CGST Act, 2017 is proper and legally sustainable. 9.2 It is known very well that the taxation 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)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....one shall be allowed to lapse. Further, the transitional provisions under Section 142 of the CGST Act, 2017, for smooth transition from earlier indirect taxes of Central Excise Act, 1944 and Finance Act, 1994 to a new GST Act, 2017, providing refund of CENVAT credit in accordance with the provisions of existing law, cannot be interpreted to mean that the existing CENVAT Credit Rules, 2004 provided only for refund in specified situations as stated in Rule 5 ibid, and hence cash refund of CENVAT credit is not permissible, as it has been specifically enabled under Section 142 of the CGST Act. Such a narrow interpretation of transitional provision, in my view, is not correct interpretation of legal provisions of the law 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. 9.5 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 in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d product were excisable commodities and fell under any of the specified chapters in the tariff schedule. Under rule 57G, every manufacturer was required to file a declaration before the jurisdictional Assistant Collector, declaring his intention to take Modvat credit after paying duty on the inputs. The object behind rule 57A read with rule 57G and rule 57-I was utilization of credit allowed towards payment of duty on any of the final products in relation to manufacture of which such inputs were intended to be used in accordance with the declaration under rule 57G. Rule 57-I referred to consequences of taking credit wrongly. 10. The object of the Modvat scheme was to reduce cost of final product by taking credit for the duty paid on the inputs. 9.7 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 provisi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 9. It is an admitted fact of the parties that the said CENVAT Credit balance was not carried forward to the Appellant's account on the appointed date since it was not due on the said day also. Therefore, in view of clear provision contain under Section 142(6)(a) of the CGST Act, Claimant/Appellant is eligible to get the refund of credit by E/87606/2019 cash except where unjust enrichment is alleged or established against the Appellant. The Appellant is also otherwise eligible to go for availment of transitional credit through filing required forms in Tran-I as per the order passed by the Hon'ble Supreme Court on 22nd July, 2022 but in view of the observation of this Tribunal read with Section 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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o take recredit of the Cenvat credit. Further after going through the sub-section (3) of Section 142 of CGST Act, I find that as per the said sub-section, 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, shall be disposed of in accordance with the provisions of 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 provisions of sub-section (2) of Section 11B of the Central Excise Act, 1944. Further it is very clear that as per sub-section (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- secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arned these credits and could not utilize the same due to substantial physical or deemed exports where no Central Excise duty was payable and under the existing provisions, had the appellants chosen to do so they could have availed refunds/ rebates under the existing provisions. There is no provision in the newly enacted 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 courts 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 impossibly to use these credits. Accordingly the ratio of such cases would be squarely applicable to the appellant's case. Following the judgement 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 judgements/decisions cited supra, we hold that the assessee is eligible for the cash refund of the cessess lying as cenvat credit balance as on 30/06/2017 in their accounts. The decision of the larger bench in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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. 10.6 Further, I have also gone through the various case laws cited by both sides to support their respective stand. However, I find that the Hon'ble Bombay High Court had an occasion to examine identical issues in a similar matter before them, in the case of Combitic Global Caplet Pvt. Ltd. Vs. Union of India in Writ Petition No.729 of 2021 with W.P. No.1228 of 2021, and being jurisdictionally binding on this Regional Bench of the Tribunal, I would like to be gui....
X X X X Extracts X X X X
X X X X Extracts X X X X
....*********************" 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 much as it uses the expression "CENVAT credit" and also "any other amount paid". Even if, we take it that petitioner has made voluntary deposit, that amount has to be shown as CENVAT credit in the account of petitioner. In the alternative, it would certainly come under the category "or any other amount paid". Therefore, either way the amount paid by petitioner, admittedly, has to be refunded. In fact, it is also admitted that an amount of Rs.10,48,11,737/- is refundable to petitioner. The credit of refund is the only issue because Mr. Adik, as an officer of this court and in fairness, agreed that Government cannot retain any amount without any authority of law. 12 Sub-Section (3) of Section 142 of the Act very clearly says "any amount eventually....