Hindustan Zinc Ltd Vs Commissioner, Central Excise & CGST(CESTAT Delhi)
The issue involved is whether the appellant-manufacturer of Lead and Zinc Concentrates which are dutiable whether they are entitled to refund of unutilized Cenvat credit of i) education cess ii) Secondary and Higher Education Cess, lying unutilized (credit balance) as on 30th June 2017.
I find that the Division Bench of this Tribunal in the case of Bharat Heavy Electricals Ltd (supra) under similar facts and circumstances have held as follows:
“4. We have carefully gone through the rival arguments. There is no dispute that on 01/07/2017, the cesses Appellants could not carry over the same under the GST regime. Thus the appellants were in a position where they could not utilize the same. We agree with learned Counsel of the appellant that the credits earned were a vested right in terms of the Hon’ble Apex Court judgement in Eicher Motors case and will not extinguish with the change of law unless there was a specific provision which would debar such refund. It is also not rebutted by the revenue that the appellants had earned 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, 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 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 or such cases would be squarely applicable to the appellant’s case. Following the Judgment 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 assesee 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 the case of Steel Strips cited by the learned Department Representative could not b applicable in view of the contradictory decisions of High Courts on the same issue”.
Following the Ruling of Division Bench of this Tribunal in Bharat Heavy Electricals Ltd. wherein under similar facts and circumstances, the appeal was allowed in favour of assessee, accordingly, I allow these Appeals and set aside the impugned orders. The Appellant shall be entitled to consequential benefits in accordance with law.
FULL TEXT OF THE CESTAT DELHI ORDER
The issue involved is whether the appellant-manufacturer of Lead and Zinc Concentrates which are dutiable whether they are entitled to refund of unutilized Cenvat credit of i) education cess ii) Secondary and Higher Education Cess, lying unutilized (credit balance) as on 30th June 2017.
2. The Appellant is engaged inter alia in the manufacture of Lead and Zinc Concentrates falling under Chapter 26 of the First Schedule to the Central Excise Tariff Act, 1985, and also availing Cenvat credit on various inputs, capital goods and input service in terms of the provisions of the Cenvat Credit Rules, 2004 (Credit Rules).
3. The Appellant was regularly filing Central Excise ER-1 returns, and as on 30.06.2017, the Appellant was having balance of eligible Cenvat credit of Rs. 13,18,02,879/- (in respect of Central Excise Registration No. AAACH7354KEM070) and Rs. 3,65,83,241/- (in respect of Central Excise Registration No. AAACH7354KXM003) in its ER-1 returns for June 2017.
4. Out of the aforesaid amounts, Appellant had transitioned the amount of Rs. 13,05,81,973/- and Rs. 3,49,84,516/- respectively, to GST regime by filing Form GST-TRAN-1 (TRAN-1) in terms of Section 140(1) of the Central Goods and Services Tax Act, 2017(CGST Act), representing the Cenvat credit of Central Excise duty and Service tax paid on inputs, input services and capital goods. As regards the balance amount of Rs. 12,20,906/- and Rs. 15,85,225/-respectively, representing the Cenvat credit of Education Cess and Secondary and Higher Education Cess (collectively, Cess amounts), Appellant had not transitioned the same in GST in view of Guidance Note dated 14.03.2018 issued by Board and amendment made to Section 140 vide Central Goods and Services Tax (Amendment) Act, 2018 (CGST Amendment Act) retrospectively w.e.f. 01.07.2017.
5. Accordingly, Appellant had filed two refund applications on 29.06.2020 for refund of unutilised Cenvat credit of Cess amounts lying in balance as on 30.06.2017 amounting to Rs. 12,20,906/- and Rs. 15,85,225/- in terms of Section 142(3) of the CGST Act, read with Section 174(2)(c) ibid.
6. In the above background, two Show Cause Notices, both dated 14.07.2020 (“SCNs”) were issued to the Appellant, proposing to reject the refund applications on the following grounds:
6.1 The definition of “eligible duties and taxes” under Section 140 of the CGST Act, was amended retrospectively w.e.f. 01.07.2017, to exclude Cess amounts. Thus, credit of such amount is not available for utilization toward GST. As per the transitional provisions under CGST Act, credit balance not transitioned in GST regime shall lapse. 6.2 Section 11B of the Central Excise Ac t, 1944 (Excise Act) provides for refund of duty and interest, whereas, credit of Cess amounts is to be availed and utilised only for payment of the Cess. Thus, there is no provision either in the Credit Rules or in Section 11B, which provides for refund of Cess amounts.
6.3 Inasmuch as the last date for filing TRAN-1 is 27.12.2017, and the refund claim under Section 11B(1) is to be filed before the expiry of one year from the relevant date, refund claims filed by the Appellant are time barred.
7. Appellant submitted detailed reply to the SCNs, both vide letters dated 27.07.2020, rebutting every allegation contained in the SCN.
8. However, without appreciating the submissions made by the Appellant, the Ld. Assistant Commissioner, Kankroli vide separate Orders-in-Original both dated 31.07.2020 (“OIO”) upheld the allegations contained in the SCN entirely and rejected Appellant’s refund claims and recorded the following findings:
