Sri Chakra Poly Plast India Pvt Ltd Vs Commissioner of Central Tax Medchal – GST (CESTAT Hyderabad)
Hyderabad: The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad bench, has directed the tax authorities to grant a cash refund of Countervailing Duty (CVD) and Special Additional Duty of Customs (SAD) paid by M/s Sri Chakra Poly Plast India Pvt Ltd. The payment was made in November 2020, after the introduction of GST, due to the company’s failure to fulfil export obligations under an Export Promotion Capital Goods (EPCG) license. The Tribunal ruled that despite the payment being made post-GST, the company is eligible for a cash refund under the transitional provisions of the CGST Act, 2017, as credit for these duties would have been available under the previous regime.
Sri Chakra Poly Plast India Pvt Ltd had imported capital goods under an EPCG license, which allows import at concessional duty rates subject to the fulfillment of specified export obligations. When the company could not meet these obligations, they paid the full customs duty foregone, amounting to ₹48,16,082, on November 20, 2020. This amount included components of CVD and SAD totaling ₹12,30,146.
Under the erstwhile Central Excise regime, the CVD and SAD paid would generally have been eligible for Cenvat Credit. However, with the advent of GST from July 1, 2017, the mechanism for availing and utilizing such credits changed significantly. As the payment was made post-GST, Sri Chakra Poly Plast India Pvt Ltd could not take this amount as Cenvat Credit in the new regime. Consequently, they filed a claim for a cash refund of the CVD+SAD component under Section 142(3) of the CGST Act, which deals with the disposal of refund claims related to the existing law.
