CESTAT allows Refund of CVD/SAD as such credit is no available under GST

Mithila Drugs Pvt. Ltd. Vs. Commissioner, Central Goods and  Service Tax,(CESTAT Delhi)

CESTAT finds that the payment of CVD and SAD subsequently during GST regime, for the imports made prior to 30.06.2017 is not disputed under the advance authorisation scheme. It is also not disputed that the appellant have paid the CVD and SAD in August, 2018 by way of regularisation on being so pointed out by the Revenue Authority. Further, I find that the Court below have erred in observing in the impugned order, that without producing proper records of duty paid invoices etc. in manufacture of dutiable final product, refund cannot be given. I further find that refund of CVD and SAD in question is allowable, as credit is no longer available under the GST regime, which was however available under the erstwhile regime of Central Excise prior to 30.06.2017. Accordingly, I hold that the appellant is entitled to refund under the provisions of Section 142(3) and (6) of the CGST Act.

Accordingly, I direct the jurisdictional Assistant Commissioner to grant refunds to the appellant of the amount of SAD & CVD as reflected in the show causes notices and also in the orders-in­ Such refund shall be granted within a period of 45 days from the date of receipt of order alongwith interest under Section 11BB of the Central Excise Act. The impugned orders are set aside.

FULL TEXT OF THE CESTAT DELHI ORDER

The issue involved is whether refund has been rightly rejected on the CVD + SAD paid for regularisation of advance licence (import licence), which have been deposited on 30.08.2018.

2. Brief facts of the case are that the Appellant is engaged in the manufacture of drugs such as Tinidazole, Metronidazole etc falling under Chapter 29 of the Central Excise Tariff Act, 1985. The final products manufactured by the Appellant were being exported and also cleared for domestic consumption on payment of applicable excise duty.

 2.1 The Appellant imported raw material/inputs under Advance Licenses (Advance license no. 0310533722 dated 13.08.2009 relates to Excise Appeal no. E/50808/2020 & Advance license no. 0310519646 dated 13.05.2009 relates to Excise Appeal no. E/50809/2020 and Advance license no. 310555105 dated 10.01.2020 relates to Excise Appeal no. E/50810/2020). The imported raw material was used in the manufacture of finished goods. The finished goods were either exported out of India or were manufactured for the domestic market on which appropriate excise duty stood discharged.

2.2  That certain disputes took place between the shareholders and the matters were taken-up before the Hon’ble Company   Law Board from 19.05.2011 to 18.02.2016. By a settlement, the matter was ultimately settled.

2.3 That Assistant Director General of Foreign Trade, Mumbai issued a deficiency letter dated 15.03.2016 under which the Appellant was informed that they have made excess import under the said Advance Licence. Under serial number 5 of the said letter dated 15.03.2016, the Appellant was directly to deposit the duty foregone on such excess import of raw material along with penalty.

2.4 Accordingly, the Appellant regularised the advance licence by depositing the BCD, CVD and SAD foregone, by making the necessary payments on 30.08.2018 (which relates to Excise Appeal No. E/50808/2020 and E/50809/220) and on 14.06.2018 (which relates to Excise Appeal No. E/50810/2020).

2.5 That the said payment of CVD + SAD was Cenvatable to the Appellant. However, since the same came to be paid on 30.08.2018 and 14.06.2018 respectively, by which time GST regime was in place, the Appellant filed refund claim dated 27.08.2019 under section 11B of the Central Excise Act 1944 to claim refund of CVD and SAD, which in the three matters are as follows:-

–

Grand total of all three appeals Rs. 25,52,739/- (CVD Rs. 16,74,068/- + SAD Rs. 8,78,671/-)

 2.6 That respective Show cause notices came to be issued as to why the refund should not be denied [Show cause notice F. No V(84)18/14/CGSTD-B/2019/2055 dated 11.09.2019 relates to Excise Appeal E/50808/2020, Show cause notice F. No. V(84)18/14/CGSTD­B/2019/2058 dated 11.09.2019 relates to Excise Appeal E/50809/2020 and Show cause notice F. No. V(84)18/08/CGSTD-B/2019/1719 dated 11.09.20 19 relates to Excise Appeal E/50808/2020].

 2.7 That respective Order-in-Originals rejected the refund claim of the Appellant. [Order-in-Original No. 13/2019/R-EX(REF-Cons)-AC dated 08.11.2019 relates to Excise Appeal E/50808/2020, Order-in­Original No. 14/2019/R-EX(REF-Cons)-AC dated 08.11.2019 relates to Excise Appeal E/50809/2020 and Order-in-Original No. 12/2019/R­EX(REF-Cons)-AC dated 11.09.2019 relates to Excise Appeal

3. Being aggrieved, the appellant preferred appeals before the Commissioner (Appeals) who was pleased to uphold the order of rejection of the refund, observing that cenvat credit is allowable on inputs as per Cenvat Credit Rules, for inputs used in manufacture of dutiable outputs. Further, the assessee is required to maintain proper records of inputs and its consumption in manufacture of dutiable goods cenvat credit taken and utilised, the person from whom the inputs have been procured etc. The burden of eligibility to cenvat credit is on the assessee/ manufacturer. It was further observed that the appellant have not provided any documentary evidence before the Adjudicating Authority as well as the Appellate Authority. Thus, in absence of such evidence the refund claim was held to be not eligible.

4. Learned Counsel for the appellant assailing the impugned order takes me to para 2 of the show cause notice wherein the details of cenvat credit under disputed is given, which reflects the details of import like Bill of Entry, reference to advance licence number, assessable value, duty foregone etc.

5. Learned Counsel further demonstrates with reference to the said table that the goods were duly imported, which is not disputed and thereafter entered in the statutory register being RG-23A Part-I wherein the goods imported vide three bills of entry have been entered and thereafter there is also details of utilisation and closing stock of the same shown as nil after utilisation. Further, learned Counsel also demonstrated from the RG-I register, that they have manufactured the finished product by utilising the inputs imported and received in the factory, and the same have been cleared on payment of duty. Learned Counsel also states that these evidences were produced and demonstrated before the Court below but the Court below has overlooked these evidences and have drawn erroneous conclusion.

5.1 Learned Counsel further relies on the precedent ruling of this Tribunal in Flexi Caps and Polymers Pvt. Ltd., vs. Commissioner, CGST & Central Excise, Indore -2021 (9) TMI 917-CESTAT, New Delhi, wherein also pursuant to demand of service tax under reverse charge mechanism after 30.06.2017, for transaction related prior to the said date (01.07.17), this Tribunal held that as the appellant was entitled to cenvat credit under Cenvat Credit Rules, which is not now available due to GST regime, is entitled to refund under Section 142 read with Rule 146 of the CGST Act.

6. Learned Authorised Representative Sh. Mahesh Bhardwaj appearing for the Revenue relies on the impugned order.

7. Having considered the rival contentions, I find that the payment of CVD and SAD subsequently during GST regime, for the imports made prior to 30.06.2017 is not disputed under the advance authorisation scheme. It is also not disputed that the appellant have paid the CVD and SAD in August, 2018 by way of regularisation on being so pointed out by the Revenue Authority. Further, I find that the Court below have erred in observing in the impugned order, that without producing proper records of duty paid invoices etc. in manufacture of dutiable final product, refund cannot be given. I further find that refund of CVD and SAD in question is allowable, as credit is no longer available under the GST regime, which was however available under the erstwhile regime of Central Excise prior to 30.06.2017. Accordingly, I hold that the appellant is entitled to refund under the provisions of Section 142(3) and (6) of the CGST Act.

8. Accordingly, I direct the jurisdictional Assistant Commissioner to grant refunds to the appellant of the amount of SAD & CVD as reflected in the show causes notices and also in the orders-in­ Such refund shall be granted within a period of 45 days from the date of receipt of order alongwith interest under Section 11BB of the Central Excise Act. The impugned orders are set aside.

9. All the three appeals are allowed.