Bharat Heavy Electricals Limited Vs Commissioner of CGST & Central Excise (CESTAT Delhi)
Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Delhi has directed the payment of interest to Bharat Heavy Electricals Limited (BHEL), Bhopal, on a delayed refund of accumulated CENVAT credit. This ruling, issued today, overturns an Order-in-Appeal dated January 23, 2023, which had denied BHEL this interest on the grounds of a pending writ petition. The Tribunal’s decision follows the subsequent dismissal of that writ petition.
The dispute originated from BHEL’s refund claim, filed on September 6, 2017, for Rs. 1,56,27,241/- in unutilized CENVAT credit. Initially, the Assistant Commissioner rejected this claim on July 12, 2018, citing a lack of provisions for such a refund. This rejection was upheld by the Commissioner (Appeals) on September 28, 2018. However, CESTAT, in its final order dated April 26, 2019, allowed BHEL’s appeal, deeming the company eligible for a cash refund of the cesses that remained as CENVAT credit balance in their accounts as of June 30, 2017. Following this, the department filed an appeal against CESTAT’s order before the Madhya Pradesh High Court. Concurrently, a Show Cause Notice was issued to BHEL on December 4, 2020, proposing to reject the refund claim on seven grounds. These grounds included contentions that the Supreme Court’s judgment in the case of Eicher Motors was inapplicable, that the Tribunal erred in inferring a cash refund entitlement, and that the refund claim was not filed under the correct provisions of Rule 5 of the CENVAT Credit Rules, 2004. The department also argued that CESTAT had overlooked the Rajasthan High Court’s decision in Banswara Syntex Ltd. Vs. Commissioner of Central Excise (2019 (365) ELT 773), which held that education cesses credit available as of March 1, 2015, was not refundable in cash. Furthermore, the department asserted that the Tribunal’s order contradicted a decision from its Hyderabad Bench regarding BHEL’s Hyderabad unit and that the issue had been decided in favor of the revenue by the Madras High Court in Commissioner of CGST & Central Excise Vs. Sutherland Global Services Pvt. Ltd. on October 16, 2020. Despite these objections, the refund amount of Rs. 1,56,27,241/- was sanctioned and disbursed by the Assistant Commissioner on February 23, 2021, but without any provision for interest.
