Case Law Details
Clariant Chemicals India Ltd Vs Commissioner of Central Excise (CESTAT Mumbai)
CESTAT Mumbai held that eligibility of taking credit of the duties is undisputable and also there was procedural aberration, in such case refund of credit by cash eligible u/s 142(6)(a) of the CGST Act.
Facts- Appellant is a manufacturer of excisable goods who procured certain inputs such as pigments, poly-ether alcohols etc. from Germany and filed bill of entry No. 2282496 on 29.06.2017 as well as cleared the goods upon payment of Customs duty including Countervailing Duty (CVD) and Special Additional Customs Duty (SAD) on dated 10.07.2017 vide challan. The goods were received by the Appellant at its factory premises on 19.07.2017 but the said payment of CVD and SAD could not be reflected in the ER-I Return as the due date was already over before the goods reached the factory. Appellant sought for refund of CENVAT Credit u/s. 11B of the Central Excise Act, 1944 read with Section 142 of the GST Act in this post GST regime as it could not avail the credits accumulated against payment of CVD and SAD. The refund sanctioning authority rejected the refund vide Order-in-Original dated 06.09.2018 and Appellant’s unsuccessful attempt before the Commissioner (Appeals) has brought the dispute to this forum.
Conclusion- It is apparent that Appellant’s eligibility to take credit of the duties paid as CENVAT Credit is undisputable and only because of procedural aberration occurred during transition to GST period, Appellant could not take the credits in its electronic ledger in the GST regime, for which it sought for refund such a contingency is perhaps foreseen by the legislature for which contingent provision is well enumerated in Clause 6(a) of Section 142 of the CGST Act that deals with claim for CENVAT Credit after the appointed date under the existing law.
It is an admitted fact of the parties that the said CENVAT Credit balance was not carried forward to the Appellant’s account on the appointed date since it was not due on the said day also. Therefore, in view of clear provision contain under Section 142(6)(a) of the CGST Act, Claimant/Appellant is eligible to get the refund of credit by cash except where unjust enrichment is alleged or established against the Appellant.
FULL TEXT OF THE CESTAT MUMBAI ORDER
confirmation by the Commissioner of Central Tax, Central Excise & Service Tax (Appeals), Raigarh of the order passed by the Assistant Commissioner, CGST & CX, Division-III, Raigad Commissionerate rejecting refund claim of Rs.11,04,057/- filed by the Appellant against CVD and SAD paid in respect of bill of entry dated 29.06.2017 in the pre-GST regime is assailed in this appeal.
2. Facts of the case, in a nutshell, is that Appellant is a manufacturer of excisable goods who procured certain inputs such as pigments, poly-ether alcohols etc. from Germany and filed bill of entry No. 2282496 on 29.06.2017 as well as cleared the goods upon payment of Customs duty including Countervailing Duty (CVD) and Special Additional Customs Duty (SAD) on dated 10.07.2017 vide challan. The goods were received by the Appellant at its factory premises on 19.07.2017 but the said payment of CVD and SAD could not be reflected in the ER-I Return as the due date was already over before the goods reached the factory. Appellant sought for refund of CENVAT Credit under Section 11B of the Central Excise Act, 1944 read with Section 142 of the GST Act in this post GST regime as it could not avail the credits accumulated against payment of CVD and SAD. The refund sanctioning authority rejected the refund vide Order-in-Original dated 06.09.2018 and Appellant’s unsuccessful attempt before the Commissioner (Appeals) has brought the dispute to this forum.
3. At the commencement of hearing of this appeal, learned Authorised Representative for the Respondent-Department has drawn attention of this Bench to the fact that owing to the divergent opinion expressed by this Tribunal, the issue of maintainability of appeal before the CESTAT has been referred to the Larger Bench on 16.09.2021 by the Chennai Bench of CESTAT in the case of M/s. Bosch Electrical Drive India Pvt. Ltd. Vs. Commissioner of GST and Central Excise, Chennai as CESTAT Hyderabad in the case of United Seamless Tubular Pvt. Ltd. Vs. Commissioner of Central Tax, Rangareddy reported in 2019 (28) GSTL 244 (Tri.-Hyd.) had given a finding that in view of provision for a separate Appellate Tribunal under CGST Act, CESTAT cannot apply the provisions of CGST Act to decide any issue. Learned Counsel for the Appellant in submitting decision of this Tribunal of the Principal Bench at Delhi made in the case of Flexi Caps and Polymers Pvt. Ltd. Vs. Commissioner of CGST & Central Excise, Indore (Date of Judgment 15.09.2021) as well as findings made by the Bombay Bench of Tribunal in the case of M/s. Oil States Industries India Pvt. Ltd. Vs. Commissioner of CGST and Central Excise, Raigad (Date of Judgment 05.08.2022) had argued that the CESTAT had given clear finding on the issue by affirming that it has jurisdiction under Section 142 read with Section 174 of the CGST Act to hear and decide similar appeals.
4. Jurisdiction being preliminary issue to be decided at the first instance, I consider it proper to take up the same before proceeding into the merit of the appeal.
(i) Having regard to the provision contained in 174(2)(5) of the CGST Act which has clearly stipulated that repeal of Excise Act and amendment of Finance Act, 1994 shall not affect any proceeding including appeal, review or reference instituted before, on or after the appointed date which shall be continued under the said repealed (Excise Act) or amended Act (Finance Act, 1994) as if CGST Act had not come into force and the said Acts (Excise Act and Finance Act) had not been amended or repeals. This Tribunal in the case of Bosch India Automotive Systems Pvt. Ltd. Vs. Commissioner of CGST and Central Excise, Pune had given a finding on 05.05.2022 that CESTAT has jurisdiction to deal with appeal instituted against order passed in respect of Excise Act and Finance Act, and there is no requirement of waiting for the decision of the Larger Bench since the terms of reference made by the Chennai Bench (cited supra) is silent about applicability of Section 174 of the CGST Act and only confined it to the provision contained in Section – 142(3) of the CGST Act.
(ii) The Commissioner (Appeals) had disposed of the appeal under the Central Excise Act while dealing with the issue of pre-deposit in para 1 of his order and noted his advise to the Appellant in the nomenclature at page 1 of the cause-title of Order-in-Appeal that appeal against his order lies to CESTAT, Mumbai under Section 35A of the Central Excise Act. His order reveals that refund under Section 142(3) of the CGST Act not permissible since Appellants case is covered under sub-Rule 5 of Section 140 of the CGST Act, 2017.
(iii) Section 142 of the CGST Act is just an enabling provision that has the effect of streamlining the issue of refund of un-availed CENVAT Credits becoming due in the post GST regime and in that respect, it has vividly referred to the application of erstwhile Excise Act. I am, therefore, of the considered opinion that CESTAT is empowered to deal with all kinds of claim made under the repealed Excise Act and the amended Finance Act, 1994.
5. On the merit of appeal, both parties had argued at length. It is an admitted fact that Appellant had paid the CVD and SAD after the appointed date that is fixed for implementation of CGST Act. It is also not disputed by the Appellant that upon receipt of goods at his factory premises on 19.07.2017, there was window open for a considerable period of time to record the un-availed CENVAT Credit through Tran-I form but it is the only mistake committed by the Appellant in not availing the same within the stipulated time frame.
6. During argument, learned Counsel for the Appellant Mr. Ganesh Kumar submitted that there is no denying of the fact that Appellant has been eligible to avail CENVAT Credit under the old tax regime but due to change in the application of law, it was put beyond any recourse to avail the credit for which Appellant had appropriately sought relief under Section 11B of the Central Excise Act read with Section 142(3) and 142(6) of the GST Act for refund of the amount so as to protect it’s vested right. In placing reliance on the judgment of this Tribunal passed in the case of Srinivasa Hair Industries Vs. CCE, Chennai-II reported in 2016-TIOL-1203-CESTAT-MAD, he further submitted that it is a settled principle of law that where utilisation of CENVAT Credit becomes impermissible, cash refund under Section 11B of the Central Excise Act is available to the assessee. Referring to Article 265 of the Constitution of India he argued that when the mandate of the Constitution is that no tax can be collected without authority of law, it is incumbent upon the Respondent-Department to justify its retention with itself when there is a bonafide claim for re-payment/re-credit to the assessee. While distinguishing the relied upon judgements placed by the learned Authorised Representative namely in the case of Aditiya Steel Rolling Mills Pvt. Ltd. Vs. CCT, Vishakhapatnam reported in 2020 (41) GSTL 323 (Tri.-Hyd.), United Seamless Tubular Pvt. Ltd. Vs. CCT, Rangareddy reported in 2019 (28) GSTL 244 (Tri.-Hyd.), NELCO Ltd. Vs. Union of India reported in 2020 (36) GSTL 24 (Bom.), P.R. Mani Electronics Vs. Union of India reported in (2020 (39) GSTL 003 (Mad.) he had argued with reason as to why they are not applicable to the case of the Appellant as in these cases either CENVAT Credits had accrued before the appointed date or that the real issue in those judgements are dissimilar to the facts under dispute in the present appeal. He also has drawn attention of this Bench to the fact that judicial forum on several occasions have taken liberal approach to bypass procedural lapses committed during the transitional stage, so as to provide the necessary relief to the assessee and apart from the judgment of the Hon’ble High Court of Madras reported in Samrajyaa and Company Vs. Dy. Commissioner of GST and Central Excise [W.P. No. 35714 of 2019], recently on 22.07.2022 Hon’ble Supreme Court of India, in the case of Union of India And Others Vs. Filco Trade Centre Pvt. Ltd. and Others, while disposing of several petitions filed under Article 136 of the Constitution of India had given specific direction to the Respondent-Department to open common portal for filing required forms in order to avail transitional credit through Tran-I and Tran-II for two months and aggrieved registered assessee, who have no Writ Petitions pending before the High Courts also were allowed to avail transitional credit by filling up the concern forms in Tran-I and Tran-II. He, therefore, submits for acceptance of his appeal for cash refund against un-availed CENVAT Credits that had accrued post commencement of CGST Act.
7. In response to such submissions, learned Authorised Representative for the Respondent-Department Mr. P.K. Acharya draws attention of this Bench to the fact that Commissioner (Appeals) had given a clear finding in his order that to avail credit post GST regime, Appellant could have sought recourse to sub-Section 5 of Section 140 of CGST Act, 2017 which are allowed to the registered person to take credit in electronic ledger, of the eligible duties and tax paid against which credit is receivable after the appointed date and Appellant had not sought recourse of the same, for which refund is impermissible as Section 142(3) of the CGST Act permits refund of CENVAT Credit which is admissible under the existing law (Central Excise Act) and as no cash refund was permissible to the Appellant under the then Excise law, Appellant is not entitled to get the benefit, for which the reasoned order passed by the Commissioner (Appeals) need not be interfered with.
8. Upon hearing the Counsels from both sides and after perusal of the case record, it is apparent that Appellant’s eligibility to take credit of the duties paid as CENVAT Credit is undisputable and only because of procedural aberration occurred during transition to GST period, Appellant could not take the credits in its electronic ledger in the GST regime, for which it sought for refund such a contingency is perhaps foreseen by the legislature for which contingent provision is well enumerated in Clause 6(a) of Section 142 of the CGST Act that deals with claim for CENVAT Credit after the appointed date under the existing law. It reads:-
“6(a) every proceeding of appeal, review or reference relating to a claim for CENVAT credit initiated weather before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law, and any amount of credit found to be admissible to the claimant shall be refunded to him in cash, notwithstanding anything to the contrary contained under the provisions of exiting law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 and the amount rejected, if any, shall not be admissible as input tax credit under this Act:
Provided that no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act;”
(Underlined to emphasise)
9. It is an admitted fact of the parties that the said CENVAT Credit balance was not carried forward to the Appellant’s account on the appointed date since it was not due on the said day also. Therefore, in view of clear provision contain under Section 142(6)(a) of the CGST Act, Claimant/Appellant is eligible to get the refund of credit by cash except where unjust enrichment is alleged or established against the Appellant. The Appellant is also otherwise eligible to go for availment of transitional credit through filing required forms in Tran-I as per the order passed by the Hon’ble Supreme Court on 22nd July, 2022 but in view of the observation of this Tribunal read with Section 142(6)(a) of the CGST Act that such CENVAT Credit amount shall be paid to the Appellant in cash, it can’t avail dual benefits once order of this Tribunal is duly complied by the Respondent-Department by the closing date of the window.
THE ORDER
10. The appeal is allowed and the order passed by the Commissioner of Central Tax, Central Excise & Service Tax (Appeals), Raigarh vide Order-in-Appeal No. MKK/466/RGD APP/2018-19 dated 07.02.2019 is hereby set aside and the Appellant is eligible to get refund of Rs.11,04,057/- paid against CVD and SAD which applicable interest, if any, within a period of two months of communication of this order.
(Order pronounced in the open court on 18.10.2022)
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