Case Law Details
Suvikram Plastex Pvt Ltd Vs CCT (CESTAT Bengalore)
Transition of unutilised Input Tax Credit could be allowed only in respect of taxes and duties which were subsumed in the new GST Law. Admittedly, the three types of Cess involved before us, namely Education Cess, Secondary and Higher Education (SHE) Cess and Krishi Kalyan Cess were not subsumed in the new GST Laws, either by the Parliament or by the States. Therefore, the question of transitioning them into the GST Regime and giving them credit under against Output GST Liability cannot arise. The plain scheme and object of GST Law cannot be defeated or interjected by allowing such Input Credits in respect of Cess, whether collected as Tax or Duty under the then existing laws and therefore, such set off cannot be allowed.
FULL TEXT OF THE CESTAT BANGALORE ORDER
The present appeal is directed against the impugned order dt. 10/12/2020 passed by the Commissioner of Central Tax(Appeals), Bangalore whereby the appeal filed by the appellant has been rejected and the Order-in-Original has been upheld.
2. Briefly the facts of the present case are that the appellants are engaged in the manufacture of excisable goods viz. HDPE/PP woven fabrics falling under Tariff heading No.39269080 of CETA 1985, HDPE/PP Woven sacks under Tariff Heading 60069000 and AGRI under Tariff heading 39232990. They are also registered with the Service Tax for payment of service tax on GTA, Business Auxiliary Service and Business Support Service. During the course of audit on the records of the appellant for the period from July 2014 to June 2015, the Department observed that the appellant has irregularly transitioned the cenvat credit of education cess and secondary and higher education cess to GST which was not permitted under the law. As per the Department, perusal of ER1 return for June 2017, shows that out of sum of rs.39,59,655/- lying in the CENVAT closing balance, only Rs.38,68,197/- is eligible credit for carrying forward, excluding education cess and secondary higher education cess as on 30.06.2017 whereas the appellant has carried forward the credit of Rs.40,09,855/-in TRAN-1 dt. 10.07.2017 and therefore the difference of Rs.1,41,658/-is ineligible credit carried forward to Electronic Credit Ledger under the GST regime is recoverable in terms of Rule 14 of CENVAT Credit Rules, 2004 (CCR, for short) read with Section 11A of Central Excise Act, 1944 (CEA, for short), along with interest under Rule 14(1)(ii) of CCR read with Section 11AA of CEA and penalty under Rule 15 of CCR read with Section 11AC(1)(c) of CEA. On these allegations, a show-cause notice dt. 12.09.2018 was issued proposing to recover the ineligible cenvat credit relating to education cess and higher secondary education cess transitioned into GST along with interest and penalty. After following the due process, the adjudicating authority confirmed the demand under proviso to Rule 14 of CCR read with Section 11A of CEA along with interest under Rule 14(1)(ii) pf CCR read with Section 11AA of CEA and penalty under Rule 15(2) of CCR. Aggrieved by the said order, appellant filed appeal before the Commissioner(Appeals) who rejected the said appeal.
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