TaxTMI 
TaxTMI 
2024 (9) TMI 1845
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....f Rule 6(3) of the Cenvat Credit Rules, 2004 (CCR) were applicable to the appellants and accordingly they had opted for reversal of proportionate CENVAT credit involved in respect of exempted goods/exempted services in terms of Rule 6(3)(ii) of the CCR, read with Rule 6(3A) of the CCR thereof. The period of dispute related to April, 2017 to June, 2017. 2.3 In terms of Rule 6(3A) of the CCR, the appellants were reversing CENVAT credit on a provisional basis for each of the three months of April, May and June 2017. At the end of the year (i.e., after March 2018), as stipulated in Rule 6(3A)of the CCR, the final reversal amount for the three months was computed on the basis of the annual figures of turnover for Financial Year 2017-18. It emerged that the quantum of provisional reversal undertaken for the three months was in excess of the actual reversal warranted under Rule 6(3A) of the CCR by Rs. 49,06,962/-. There is no dispute on the fact that the reversal of CENVAT credit made on a provisional basis for the three months of April, May and June 2017 was in excess of the actual reversal warranted by Rs. 49,06,962/-. 2.4 Therefore, the appellants had filed refund claim on 24.04.....
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....e further submitted, that there is no dispute on the fact that the incidence of duty is not passed on to any other person, and that they had submitted a certificate to this effect at the time of filing the refund claim and no dispute in this regard has been raised by the Revenue at any stage of the proceedings. Hence, he submitted that their case is squarely covered by clause (d) of Section 11B ibid. 3.3 In addition to the above, learned Advocate submitted that without prejudice to their above claim, he stated that if the argument of the Revenue that there exists no provision for refund of excess CENVAT payment made in cash, is taken at face value, it will render the phrase "CENVAT credit" in Section 142(3) of the CGST Act otiose. He further submitted that it is the case of the Revenue that refund of CENVAT credit is not provided for, except in case of exports under Rule 5 of the CCR. In this regard, he emphatically submitted that Section 142(3) of the CGST Act, 2017 specifically provides that refund of CENVAT credit will be paid in cash, notwithstanding anything to the contrary under any of the old laws. Thus, he claimed that the appellants are eligible for refund and prayed th....
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.... services or both is revised upwards on or after the appointed day, the registered person who had removed or provided such goods or services or both shall issue to the recipient a supplementary invoice or debit note, containing such particulars as may be prescribed, within thirty days of such price revision and for the purposes of this Act such supplementary invoice or debit note shall be deemed to have been issued in respect of an outward supply made under this Act; (b) where, in pursuance of a contract entered into prior to the appointed day, the price of any goods or services or both is revised downwards on or after the appointed day, the registered person who had removed or provided such goods or services or both may issue to the recipient a credit note, containing such particulars as may be prescribed, within thirty days of such price revision and for the purposes of this Act such credit note shall be deemed to have been issued in respect of an outward supply made under this Act: Provided that the registered person shall be allowed to reduce his tax liability on account of issue of the credit note only if the recipient of the credit note has reduced his input....
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....d from, or paid by, him and the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person : Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of sub-section (2) as substituted by that Act : Provided further that the limitation of one year shall not apply where any duty and interest, if any, paid on such duty has been paid under protest. Explanation.-Omitted by the Finance (No. 2) Act, 1980. (2) If, on receipt 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 d....
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....e end of the financial year, take credit of amount equal to difference between the total of the amount of the aggregate of ineligible credit and ineligible common credit paid during the whole year and the total of the amount of annual ineligible credit and annual ineligible common credit, namely, [{(A+D) aggregated for the whole year)} - {A (Annual) + D (Annual)}], where the former of the two amounts is greater than the later;" 7.2 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. Commissioner of Central Tax, Chennai. The relevant paragraphs of the said order is extracted and given below: "48. The Division Bench of the Tribunal, while referring the matter to the Larger Bench had observed in paragraph 14.1 that an appeal would lie under section 112 of the CGST Act to the Appellate Tribunal constituted under the provisions of the CGS....
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.... duly examined by the original authority in his order dated 16.03.2020. The relevant paragraphs of the said order is extracted and given below: "... The jurisdictional Range Superintendent vide his letter, dated 26.06.2019 reported that the claimant has not taken the re-credit due to the introduction of GST from 01.07.2017. There is no transitional provisions provided in Section 139 to 142 of the CGST, Act, 2017 for recredit or carry forward the Cenvat Credit in the instant case. Therefore, the amount involved in the instant case could not have transmitted to Electronic Credit ledger of the claimant. The GST coming into force with effect from 01.07.2017, taking Cenvat credit of the above differential amount in their Cenvat register is not permitted. Chapter XX of CGST Act, 2017 which governs the transitional provisions for carrying forward the Cenvat Credit into GST regime does not cover such situation for taking the unutilized differential amount of Cenvat credit as Input Tax Credit in GST regime. In terms of the provisions of Section 142(3) of the CGST Act, 2017, every claim for refund filed by any person before, on or after the appointed day, for refun....
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....mounting to Rs. 49,06,962/- filed by the claimant is to be sanctioned." From the above it transpires, that the original authority after satisfying himself about the requirements of Section 11B ibid, had sanctioned the refund of excess CENVAT reversed by the appellants. 7.5 Learned Commissioner (Appeals) during the proceedings of appeal preferred by the department, against the above original order sanctioning the refund to the appellants, had also observed as follows: "8.3 Thus, I find that as defined under clause (eb) of the Section 11B(5)(B) of the Central Excise Act, 1944, the respondent has filed the instant refund claim within the prescribed time period of one year from the relevant date, hence, the appeal filed by the appellant is unsustainable in this count also. 8.4 I find that there is no dispute that the respondent was eligible to take credit of excess reversed Cenvat credit in terms of clause (f) of the Rule 6(3) of the Cenvat Credit Rules, 2004. I find that the respondent argued that they were eligible for refund of the said credit under Section 11(2)(c) of the Central Excise Act, 1944 read with Section 142 (3) of the CGST Act, 2017. However, the ....
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....he main ground on which the refund application of the appellants was held as not entertainable in the impugned order is, that there exists no provision under Rule 5 of the CCR, for cash refund of excess CENVAT credit and therefore the refund in terms of proviso (c) to Section 11B(2) ibid, is not permissible in the case of the appellants. In this regard, I find that the provisions of Section 142(3) of the CGST Act, is a transitional 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 142(3) 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 fulfilment of unjust enr....
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....id by them, 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, under Section 142(3) of the CGST Act, 2017. 8.1 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 CENVAT scheme and the see whether such cash refund during its migration to GST regime as provided under Section 142 of the CGST Act, 2017 is proper and legally sustainable. 8.2 If we turn the history of CENVAT scheme right from its beginning, it can be seen initially MODVAT was in operation. The Modified Value Added Tax (MODVAT) is the predecessor to Central Value Added Tax (CENVAT). The CENVAT credit scheme has its origin in India owing to the Indirect Taxation Enquiry Committee formed in 1976, popularly known as Jha Committee. The committee took serious note of the limitati....
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....cise duty will be transparent It will, therefore, benefit both the consumers and exporters. 116. However, in view of the novelty of the scheme, we have to hasten slowly and implement the MODVAT scheme in stages. As a first measure, I propose to introduce MODVAT scheme for all goods covered by 37 specified chapters of the Central Excise Tariff Act, 1985. The Scheme as a result would cover products of chemical and allied industries, paints and packaging materials, plastics, glass and glassware, rubber products, base metals and articles of base metals, machinery and mechanical appliances including electrical equipments, motor vehicles and certain miscellaneous manufactured products. This would imply that as long as the input and the final product are covered by the specified 37 chapters and the final product bears some duty of excise, credit of duty on the inputs covered by these chapters will be available. 117. The proforma credit given will cover both excise duty and additional duty of customs also known as countervailing duty. Set off will also be available for packaging materials, consumables, paints though these are not strictly raw materials. Items outside thes....
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.... 88. Over the years, disputes between the department and assessee on the interpretation of MODVAT rules and procedures have plagued the system. I propose to put an end to this situation. With effect from 1st April 2000, the plethora of existing rules will be replaced by a small set of simple and transparent rules, which, I am sure, shall reduce disputes to a minimum. 89. I also propose to expand and rationalize the scope of the MODVAT scheme. All inputs and all capital goods are now included in the eligible list of MODVAT scheme. The only exception will be High Speed Diesel Oil and Petrol. However, I propose that the availability of MODVAT credit on capital goods will be spread over a period of two years, with effect from 1st April 2000. 90. My proposals include full extension of MODVAT scheme to cigarettes for the first time, which should cheer the industry. However, the good news for the cigarette manufacturers ends here. I propose to enhance the rates of excise duty on all categories of cigarettes by 5 %. 91. At present, MODVAT credit of CVD paid on project imports is restricted to the extent of 75%. This has been an irritant. This credit shall ....
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....r long journey which began in December 2002, when the Kelkar Task Force on indirect taxation suggested a comprehensive Goods and Services Tax (GST) based on the Value Added Tax principle ended with the introduction of GST w.e.f. 01.07.2017, as seen from the above Budget Speech of the Finance Minister on 28.02.2006, the proposal to introduce GST was first mooted in the Budget Speech for the financial year 2006-07. GST is a destination based consumption tax. It has been designed in a manner so that tax is collected at every stage and the credit of tax paid at the previous stage is available to set off the tax to be paid at the next stage of transaction thereby eliminating cascading of taxes. This eradicates "tax on tax" and allows cross utilization of input tax credits which benefit the industry by making the entire supply chain tax neutral. 8.6 It is known very well that the taxation of goods and services in India has, hitherto, been characterised 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 indi....
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....other amount paid under the existing law shall be paid in cash. Further, it is only such amount of CENVAT credit which is rejected, as not being eligible, that alone 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, 2017. 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 justified. Therefore, denial of cash refund solely on the basis that there exists no provision under CENVAT statue for cash refund, is not legally sustainable. 8.9 I further ....
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....d a manufacturer to take instant credit of the central excise duty paid on the inputs used by him in the manufacture of the finished product, provided that the input and the finished 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." 8.11 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....
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....all 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;" (Underlined to emphasise) 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....
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....s been claimed were debited in the Cenvat credit account at the time of filing the refund claim as required under the said notification and the appellant was entitled to take recredit of the Cenvat credit. Further after going through the subsection (3) of Section 142 of CGST Act, I find that as per the said subsection, 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 clai....
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....case in Gauri Plasticulture and the context in which the judgement of the Hon'ble Bombay High Court was delivered is denial of refund of unutilised Cenvat credit availed by the assessee on the ground that they had surrendered the Central Excise registration certificate and that the entire credit unutilised will lapse. Further, the dispute was regarding availability of small scale industries exemption under Notification dated 28.02.1993, which was denied by issue of Show Cause Notice; the demand was confirmed by the Order-in-Original by denying exemption on the ground that the assessee was manufacturing pipes bearing a mark 'Jain pipe', and in an appeal by the assessee, the learned Commissioner (Appeals) had held that this cannot be considered as a brand name. Consequent to this, the assessee had filed a refund claim. On careful perusal of the judgement dated 14.06.2019, I find that the facts of the present case before me is entirely different on account of the following 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 appellant....
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....l not get the money or credit thereof under the GST regime. Mr. Sridharan states since the government cannot retain any amount which is not due to it, the amount so collected is allowed to be paid over in cash as provided in sub Section (3) of Section 142 of the Act. xxx xxx xxx xxx 10 Section 142(3) of the Act reads as under: "142:- Miscellaneous transitional provisions :- (1) ******************* (2) ******************* (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 ....