Custom, Excise & Service Tax Tribunal
Kgk Diamonds I P Ltd vs Commissioner Of Cgst & Central ... on 8 May, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
MUMBAI
REGIONAL BENCH - COURT NO. I
SERVICE TAXAPPEAL No. 85773 of 2021
[Arising out of Order-in-Appeal No. NA/GST/A-III/MUM/08/2020-21 dated 30.04.2020
passed by the Commissioner (Appeals-III), GST & Central Excise, Mumbai]
KGK Diamonds (India) Private Limited .... Appellants
DE No.4011/4016, Bharat Diamond Bourse
Bandra Kurla Complex, Bandra (East)
Mumbai - 400 051.
VERSUS
Commissioner of GST & Central Excise .... Respondent
GST & Central Excise, Mumbai East Commissionerate
9th Floor, Lotus Info Centre, Station Road
Parel (East)
Mumbai - 400 012.
APPEARANCE:
Ms. Lalita S Phadke a/w Shri D.A. Bhalerao, Advocates for the Appellants
Shri A.K. Shrivastava, Authorized Representative for the Respondent
CORAM:
HON'BLE MR. M.M. PARTHIBAN, MEMBER (TECHNICAL)
FINAL ORDER NO. A/87409/2024
Date of Hearing: 08.05.2024
Date of Decision: 08.05.2024
PER: M.M. PARTHIBAN
This appeal has been filed by M/s KGK Diamonds (India) Private
Limited, Mumbai (herein referred to as 'the appellants' for short) assailing
Order-in-Appeal No. NA/GST/A-III/MUM/08/2020-21 dated 30.04.2020
(referred to, as 'the impugned order') passed by the Commissioner
(Appeals-III), GST & Central Excise, Mumbai.
2.1 The facts of the case, leading to this appeal, are summarised herein
below:
2.2 The appellants were engaged in the manufacture of manufacture of
Cut and Polished Diamonds and its further export out of the country. For
the above purpose, the appellants hold IEC No. 388087684 and also are
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duly registered with the Gem & Jewellery Export Promotion Council
holding membership No. GJC/REGN/MFG/HO-MUM(M)G07617/2012-17.
For the purpose of availing input credit of service tax paid on input
services, they are also holding Service Tax Registration No.
AADCK7579ASD001.
2.3 The appellants had availed 'technical inspection and certification
services' in the manufacture and export of cut and polished diamonds.
The appellants could not take the CENVAT credit of service tax paid
towards such input service, by following the provisions of CENVAT Credit
Rules, 2004, as there was transition from Central Excise and Service Tax
regime to Goods and Service Tax (GST) regime. However, the export
goods viz., manufactured using such services were exported during the
period August 2017 to September, 2017 and accordingly, the appellants
had filed refund claim as per Notification No.41/2012-S.T. dated
29.06.2012 as amended. The jurisdictional Assistant Commissioner, CGST
Division-IV, Mumbai East had scrutinized the refund application and found
that the appellants are the manufacturer and had exported 'Cut and
Polished Diamond' during the relevant period. He further found that the
said refund claim is complete in all respects and the amount of claim
made is arithmetically correct. Further, he also found that all documents
requiring certification have been filed after due certification. Therefore,
'technical inspection and certification services' which are used for export
of goods by the appellants and which are specified services as per
Notification No.41/2012-ST dated 29.06.2012 as amended are found
eligible for a refund by the original authority.
2.4 In the above case of refund claim filed by the appellants, the
original authority vide Order-in-OriginalNo.25/Refund/SC/2018-19 dated
January, 2019had sanctioned an amount of 6,56,216/- under Section 93A
of the Finance Act, 1994 read with Notification No.41/2012-ST dated
29.06.2012 as amended. On the basis of review of the above order, the
department had appealed against it before the learned Commissioner
(Appeals-III), who had set aside the order of the original authority, and
allowed the appeal filed by the department holding that the refund claim
as not maintainable vide Order-in-Appeal dated 30.04.2020. Feeling
aggrieved with the impugned order, the appellants have filed this appeal
before the Tribunal.
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3.1 Learned Advocate for the appellants submitted that the issue of denial
of refund claim in respect of input services used for export of goods, is no
more disputable. In this regard, they relied upon the decision of this
Tribunal in Final Order No. A/85131-85132/2023 dated 31.01.2013, in
the case of M/s Vinod Kumar Diamond India Pvt. Ltd. Vs. Commissioner
of CGST &Central Excise, Mumbai East, wherein a similar exporter
seeking refund of input services viz., technical inspection and certification
service, the Tribunal have held that right to rebate had accrued to the
appellant therein and such right could not be extinguished by the
subsequent event of repeal of Chapter V of the Finance Act, 1994.
3.2 On the above basis, learned advocate pleaded that the impugned
order is liable to be set aside and therefore the appeal preferred by them,
may be allowed.
4. On the other hand, learned Authorised Representative for Revenue
reiterated the findings of the Commissioner (Appeals-III) in the impugned
order, and submitted that the appeal preferred by the appellants is liable
to be set aside.
5. Heard both sides and perused the case records. The additional
submission made in the form written paper book in this case was also
perused by me carefully.
6. The short issue for determination before the Tribunal is whether
service tax paid on input services used for export of 'Cut and Polished
Diamond' for the period August, 2017 to September, 2017, is refundable
in terms of Notification No.41/2002-S.T. dated 29.06.2012 or not?
7. In order to appreciate the above issue under dispute, the
Notification No.41/2012-S.T. dated 29.06.2012 under which the refund
has been claimed, which is relevant to the dispute, are extracted and
herein given below for ease of reference:
Rebate for Service tax paid on Services used for export of goods --
New Simplified Scheme -- Notification No. 41/2012-S.T. dated
29.06.2012
"In exercise of the powers conferred by section 93A of the Finance Act, 1994
(32 of 1994) (hereinafter referred to as the said Act) and in supersession of the
notification of the Government of India in the Ministry of Finance (Department
of Revenue) number 52/2011-Service Tax, dated the 30th December, 2011,
published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section
(i) vide number G.S.R. 945(E), dated the 30th December, 2011, except as
respects things done or omitted to be done before such supersession, the
Central Government, on being satisfied that it is necessary in the public
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interest so to do, hereby grants rebate of service tax paid (hereinafter referred
to as rebate) on the taxable services which are received by an exporter of
goods (hereinafter referred to as the exporter) and used for export of goods,
subject to the extent and manner specified herein below, namely :-
Provided that -
(a) the rebate shall be granted by way of refund of service tax paid on
the specified services.
Explanation. - For the purposes of this notification,-
(A) "specified services" means -
(i) in the case of excisable goods, taxable services that have been used
beyond the place of removal, for the export of said goods;
(ii) in the case of goods other than (i) above, taxable services used for the
export of said goods;
but shall not include any service mentioned in sub-clauses (A), (B),
(BA) and (C) of clause (l) of rule (2) of the CENVAT Credit Rules, 2004;
(B) "place of removal" shall have the meaning assigned to it in section 4 of
the Central Excise Act, 1944 (1 of 1944);
(b) the rebate shall be claimed either on the basis of rates specified in the
Schedule of rates annexed to this notification (hereinafter referred to as the
Schedule), as per the procedure specified in paragraph 2 or on the basis of
documents, as per the procedure specified in paragraph 3;
(c) the rebate under the procedure specified in paragraph 3 shall not be
claimed wherever the difference between the amount of rebate under the
procedure specified in paragraph 2 and paragraph 3 is less than twenty per
cent of the rebate available under the procedure specified in paragraph 2;
(d) no CENVAT credit of service tax paid on the specified services used
for export of goods has been taken under the CENVAT Credit Rules, 2004;
(e) the rebate shall not be claimed by a unit or developer of a Special
Economic Zone;
(2) the rebate shall be claimed in the following manner, namely :-
(a) manufacturer-exporter, who is registered as an assessee under the
Central Excise Act, 1944 (1 of 1944) or the rules made thereunder shall
register his central excise registration number and bank account number with
the customs;
(b) exporter who is not so registered under the provisions referred to in
clause (a), shall register his service tax code number and bank account
number with the customs;
(c) service tax code number referred to in clause (b), shall be obtained by
filing a declaration in Form A-2 to the Assistant Commissioner of Central Excise
or the Deputy Commissioner of Central Excise, as the case may be, having
jurisdiction over the registered office or the head office, as the case may be, of
such exporter;
(d) the exporter shall make a declaration in the electronic shipping bill or bill
of export, as the case may be, while presenting the same to the proper officer
of customs, to the effect that --
(i) the rebate of service tax paid on the specified services is claimed as a
percentage of the declared Free On Board (FOB) value of the said goods, on
the basis of rate specified in the Schedule;
(ii) no further rebate shall be claimed in respect of the specified services,
under procedure specified in paragraph 3 or in any other manner, including
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on the ground that the rebate obtained is less than the service tax paid on
the specified services;
(iii) conditions of the notification have been fulfilled;
(e) service tax paid on the specified services eligible for rebate under this
notification, shall be calculated by applying the rate prescribed for goods of a
class or description, in the Schedule, as a percentage of the FOB value of the
said goods;
(f) amount so calculated as rebate shall be deposited in the bank account of
the exporter;
(g) shipping bill or bill of export on which rebate has been claimed on the
basis of rate specified in the Schedule, by way of procedure specified in this
paragraph, shall not be used for rebate claim on the basis of documents,
specified in paragraph 3;
(h) where the rebate involved in a shipping bill or bill of export is less than
rupees fifty, the same shall not be allowed;
(3) the rebate shall be claimed in the following manner, namely :-
(a) rebate may be claimed on the service tax actually paid on any specified
service on the basis of duly certified documents;
(b) the person liable to pay service tax under section 68 of the said Act on
the taxable service provided to the exporter for export of goods shall not be
eligible to claim rebate under this notification;
(c) the manufacturer-exporter, who is registered as an assessee under the
Central Excise Act, 1944 (1 of 1944) or the rules made thereunder, shall file a
claim for rebate of service tax paid on the taxable service used for export of
goods to the Assistant Commissioner of Central Excise or the Deputy
Commissioner of Central Excise, as the case may be, having jurisdiction over
the factory of manufacture in Form A-1;
(d) the exporter who is not so registered under the provisions referred to in
clause (c), shall before filing a claim for rebate of service tax, file a declaration
in Form A-2, seeking allotment of service tax code, to the Assistant
Commissioner of Central Excise or the Deputy Commissioner of Central Excise,
as the case may be, having jurisdiction over the registered office or the head
office, as the case may be, of such exporter;
(e) the Assistant Commissioner of Central Excise or the Deputy
Commissioner of Central Excise, as the case may be, shall, after due
verification, allot a service tax code number to the exporter referred to in
clause (d), within seven days from the date of receipt of the said Form A-2;
(f) on obtaining the service tax code, exporter referred to in clause (d), shall
file the claim for rebate of service tax to the Assistant Commissioner of Central
Excise or the Deputy Commissioner of Central Excise, as the case may be,
having jurisdiction over the registered office or the head office, as the case
may be, in Form A-1;
(g) the claim for rebate of service tax paid on the specified services used for
export of goods shall be filed within one year from the date of export of the
said goods.
Explanation. - For the purposes of this clause the date of export shall be
the date on which the proper officer of Customs makes an order permitting
clearance and loading of the said goods for exportation under section 51 of the
Customs Act, 1962 (52 of 1962);
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(h) where the total amount of rebate sought under a claim is upto 0.50% of
the total FOB value of export goods and the exporter is registered with the
Export Promotion Council sponsored by Ministry of Commerce or
Ministry of Textiles, Form A-1 shall be submitted along with relevant invoice,
bill or challan, or any other document for each specified service, in original,
issued in the name of the exporter, evidencing payment for the specified
service used for export of the said goods and the service tax paid thereon,
certified in the manner specified in sub-clauses (A) and (B) :
(A) if the exporter is a proprietorship concern or partnership firm, the
documents enclosed with the claim shall be self-certified by the exporter
and if the exporter is a limited company, the documents enclosed with the
claim shall be certified by the person authorised by the Board of Directors;
(B) the documents enclosed with the claim shall also contain a certificate
from the exporter or the person authorised by the Board of Directors, to the
effect that specified service to which the document pertains has been
received, the service tax payable thereon has been paid and the specified
service has been used for export of the said goods under the shipping bill
number;
(i) where the total amount of rebate sought under a claim is more than
0.50% of the total FOB value of the goods exported, the procedure specified in
clause (h) above shall stand modified to the extent that the certification
prescribed thereon, in sub-clauses (A) and (B) shall be made by the Chartered
Accountant who audits the annual accounts of the exporter for the purposes of
the Companies Act, 1956 (1 of 1956) or the Income Tax Act, 1961 (43 of
1961), as the case may be;
(j) where the rebate involved in a claim is less than rupees five hundred,
the same shall not be allowed;
(k) the Assistant Commissioner of Central Excise or the Deputy
Commissioner of Central Excise, as the case may be, shall, after satisfying
himself,-
(i) that the service tax rebate claim filed in Form A-1 is complete in every
respect;
(ii) that duly certified documents have been submitted evidencing the
payment of service tax on the specified services ;
(iii) that rebate has not been already received on the shipping bills or bills of
export on the basis of procedure prescribed in paragraph 2; and
(iv) that the rebate claimed is arithmetically accurate,
refund the service tax paid on the specified service within a period of one
month from the receipt of said claim :
Provided that where the Assistant Commissioner of Central Excise or the
Deputy Commissioner of Central Excise, as the case may be, has reason to
believe that the claim, or the enclosed documents are not in order or that there
is a reason to deny such rebate, he may, after recording the reasons in writing,
take action, in accordance with the provisions of the said Act and the rules
made thereunder;
(4) Where any rebate of service tax paid on the specified services has been
allowed to an exporter on export of goods but the sale proceeds in respect of
said goods are not received by or on behalf of the exporter, in India, within the
period allowed by the Reserve Bank of India under section 8 of the Foreign
Exchange Management Act, 1999 (42 of 1999), including any extension of such
period, such rebate shall be deemed never to have been allowed and may be
recovered under the provisions of the said Act and the rules made thereunder;
(5) This notification shall come into effect on the 1st day of July, 2012......"
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8.1 On perusal of the above notification under which refund of service
tax has been claimed, it transpires that the refund is being allowed in
respect of service tax paid on the specified services used in respect of
export of goods at the prescribed schedule of rates, subject to fulfilment
of the conditions mentioned in clause (a) to (h) of paragraph 1; clause (a)
to (h) of paragraph 2. It is the fact on record, that the original authority
had scrutinized the refund claim filed 31.07.2018 and after recording the
findings that the appellants have followed all the prescribed procedure
and have also fulfilled all the conditions of the said Notification dated
29.06.2012, had sanctioned the refund. However, in the impugned order,
learned Commissioner (Appeals-III) had denied the refund on the ground
that the appellants have filed refund claim under the repealed notification
and therefore the original authority had erred in sanctioning the subject
refund claim. Further, learned Commissioner (Appeals-III) also gave a
finding that exports of appellants would be classified as 'zero rated
supply' and refund cannot be allowed under the existing law.
8.2 In this regard, I find that in order to claim the refund of service tax
paid on the input services on export of goods as per the Notification
No.41/2012-S.T. dated 29.06.2012, the only requirement in respect of
the address of the appellants-exporter is that they should have taken
registration as exporter with the Export Promotion Council sponsored by
Ministry of Commerce which in the present case is the Gem & Jewellery
Export Promotion Council. Further, the appellants-exporter have also
registered with the jurisdictional Service Tax authorities vide Service Tax
registration No.AADCK7579ASD001. Hence, I find that the requisite
conditions for registration of the details with the departmental authorities
have been duly fulfilled in the case.
9.1 I further find that the issue of transitional arrangement as provided
under Section 142 of CGST Act, 2017 has already been addressed by the
Co-ordinate Bench of the Tribunal in the following cases, and it was held
that cash refund is permissible. The relevant paragraphs in the Final
Order No. A/85964-2022 dated 18.10.2022 in the case of M/s Clariant
Chemicals India Limited Vs. Commissioner of Central Excise & Service
Tax, Raigad are extracted and given below:
"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,
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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
E/87606/2019 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."
9.2 The relevant paragraphs in the Final Order No. 42467/2021 dated
16.12.2021 in the case of M/s Circular Flow Technologies India Pvt.
Limited Vs. Principal Commissioner of GST & Central Excise, Coimbatore
are extracted and given below:
"11. Section 142 (3) of GST Act provides how to deal with claims of
refund of service tax of tax and duty / credit under the erstwhile law. It
is stated that therein that such claims have to be disposed in
accordance with the provisions of existing law and any amount
eventually accruing has to be paid in cash.
12. In the present case, there is no allegation that the credit is not
eligible to the appellant. It is merely stated that tax has been paid
voluntarily and therefore credit is not available under the GST regime.
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Though credit is not available as Input Tax Credit under GST law, the
credit under the erstwhile Cenvat Credit Rules is eligible to the
appellant. Such credit has to be processed under Section 142 (3) of
GST Act, 2017 and refunded in cash to the assessee.
13. From the discussions made above, the principles laid down in the
decisions cited above, I am of the view that rejection of refund claim
cannot be justified. The impugned order is set aside. Appeal is allowed
with consequential relief, if any."
9.3 In the case of Dhyan Networks and Technologies Pvt. Ltd. Vs.
Commissioner of GST and Central Excise, Chennai - (2023) 4 Centax 304
(Tri.-Mad), the Tribunal has held that cash refund is required to be given
to the assessee in terms of Section 142 of the CGST Act, 2017. The
relevant paragraphs of the said order are extracted and given below:
"8. Further I find that this Tribunal in the case of Wave Mechanics Pvt.
Ltd. [2019 (370) E.L.T. 291 (Tribunal)] cited supra has held
that cash refund is not admissible under Rule 5 of Cenvat Credit Rules
read with Notification No. 27/2012-C.E., dated 18-6-2012 in respect of
clearances made by one EOU to another EOU on IUT basis. It was also
held that the amounts in respect of cash refund has been claimed were
debited in the Cenvat credit account at the time of filing
the refund claim as required under the said notification and the
appellant was entitled to take recredit of the Cenvat credit. Further after
going through the sub-section (3) of Section 142 of CGST Act, I find
that as per the said sub-section, every claim for refund filed by any
person before, on or after the appointed day, for refund of any amount
of Cenvat credit, duty, tax, interest or any other amount paid under the
existing law, shall be disposed of in accordance with the provisions of
existing law and any amount eventually accruing to him shall be paid
in cash, notwithstanding anything to the contrary contained under the
provisions of existing law other than the provisions of sub-section (2) of
Section 11B of the Central Excise Act, 1944. Further it is very clear that
as per sub-section (6)(a) of Section 142, every proceeding of appeal,
review or reference relating to a claim for Cenvat credit initiated
whether 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 existing law other than the provisions
of sub-section (2) of Section 11B of the Central Excise Act, 1944.
Further I find that the appellant had already debited the entire amount
in their Cenvat account and the said amount was debited under a bona
fide belief that the cash refund would be sanctioned to them and the
very fact that Cenvat credit was never disallowed, hence
the Cenvat credit lying in the balance of Cenvat account are liable to
be refunded in cash to the appellant as per the provisions of sub-section
(3) or sub-section (6)(a) of Section 142 of CGST Act. This issue is no
more res integra and has been held in favour of the appellant by
various decisions cited supra. Hence, by following the ratio of the said
decisions, I am of the considered view that the impugned order denying
the cash refund is not sustainable in law and the appellant is entitled
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to cash refund as per sub-section (3) and sub-section (6)(a) of Section
142 of CGST Act. All the three appeals are accordingly allowed."
7. As the appellant has been allowed to take re-credit and is not able to
do the same due to the introduction of G.S.T., I am of the view that he
has to be given refund of the said amount in cash. From the discussions
made above and also following the decision as cited above, I am of the
view that the appellant is eligible for refund of the amount of
Rs.2,93,427/-."
9.4 Further, I have also gone through the various case laws cited by
both sides to support their respective stand. However, I find that the
Hon'ble Bombay High Court had an occasion to examine identical issues
in a similar matter before them, in the case of Combitic Global Caplet Pvt.
Ltd. Vs. Union of India in Writ Petition No.729 of 2021 with W.P. No.1228
of 2021, and being jurisdictionally binding on this Regional Bench of the
Tribunal, I would like to be guided by such judgement delivered recently.
In the judgement delivered on 10.06.2024, the Hon'ble Bombay High
Court have held that Sub-section (3) of Section 142 of the CGST Act very
clearly says any amount eventually accruing shall be paid in cash and
directed the departmental authorities/sanctioning authority for refunding
the amount of duty refundable to the petitioner in cash instead of credit
in CENVAT account. The relevant paragraphs of the said judgement of
the Hon'ble Bombay High Court are extracted and given below:
"8 It is these orders which are impugned in this petition and the stand
taken by petitioner is that Section 142(3) of the Central Goods And
Services Tax Act 2017 (the Act) clearly says, w.e.f 1st July 2017, in
view of the effect of change in the regime, i.e., when the GST regime
was introduced, any refund that was payable to petitioner has to be
paid in cash. Mr. Sridharan submitted that since the CENVAT regime has
come to an end, credit of amount payable to petitioner to the CENVAT
account would make no sense because petitioner will not get the money
or credit thereof under the GST regime. Mr. Sridharan states since the
government cannot retain any amount which is not due to it, the
amount so collected is allowed to be paid over in cash as provided in
sub Section (3) of Section 142 of the Act.
xxx xxx xxx xxx
10 Section 142(3) of the Act reads as under:
"142:- Miscellaneous transitional provisions :-
(1) *******************
(2)*******************
(3) Every claim for refund filed by any person before, on or after the
appointed day, for refund of any amount of CENVAT credit, duty, tax,
interest or any other amount paid under the existing law, shall be
disposed of in accordance with the provisions of existing law and any
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amount eventually accruing to him shall be paid in cash,
notwithstanding anything to the contrary contained under the
provisions of existing law other than the provisions of sub-section (2)
of section 11B of the Central Excise Act, 1944 (1 of 1944): Provided
that where any claim for refund of CENVAT credit is fully or partially
rejected, the amount so rejected shall lapse: Provided further 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. ********************************"
11 In our view, Section 142(3) of the Act is very clear in as much as, it
says "every claim for refund filed by any person before, on or after the
appointed day, for refund of any amount of CENVAT credit, duty, tax,
interest or any other amount paid under the existing law .............. and
any amount eventually accruing ........ shall be paid in cash ......". It is
very widely worded in as much as it uses the expression "CENVAT
credit" and also "any other amount paid". Even if, we take it that
petitioner has made voluntary deposit, that amount has to be shown as
CENVAT credit in the account of petitioner. In the alternative, it would
certainly come under the category "or any other amount paid".
Therefore, either way the amount paid by petitioner, admittedly, has to
be refunded. In fact, it is also admitted that an amount of
Rs.10,48,11,737/- is refundable to petitioner.
The credit of refund is the only issue because Mr. Adik, as an
officer of this court and in fairness, agreed that Government cannot
retain any amount without any authority of law.
12 Sub-Section (3) of Section 142 of the Act very clearly says "any
amount eventually accruing shall be paid in cash". In the circumstances,
we are of the opinion that respondents ought to have directed the
sanctioning authority to refund the amount of duty refundable to
petitioner in cash instead of credit in CENVAT account, notwithstanding
anything to the contrary contained under the provisions of existing law
other than the provisions of sub-section (2) of section 11B of the
Central Excise Act, 1944.
13 Therefore, Rule made absolute in terms of prayer clauses (a) and (b)
of both petitions, which are quoted above.
14 The amount shall be paid together with accumulated interest in
accordance with law within four weeks of this order being uploaded."
10. On perusal of the case records, I also find that the issue in dispute in
the present case have been decided in favour of the appellants, in a
similarly placed exporter M/s S. Vinod Kumar Diamond India Pvt. Ltd.
(supra) vide Final Order No. A/85131-85132/2023 dated 31.01.2023. In
this case, the Tribunal have held that they could not sustain the
impugned order. The relevant paragraphs of the said order are extracted
and given below:
"4.4 Before I proceed further it is necessary to read the Notification in
dispute. The text of the notification is reproduced below:
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ST/85773/2021
New Delhi, the 29th June, 2012 Notification No. 41/2012-Service
Tax G.S.R. ___ (E).- In exercise of the powers conferred by section
93A of the Finance Act, 1994 (32 of 1994) (hereinafter referred to
as the said Act) and in supersession of the notification of the
Government of India in the Ministry of Finance (Department of
Revenue) number 52/2011 - Service Tax, dated the 30th December,
2011, published in the Gazette of India, Extraordinary, Part II,
Section 3, Sub-section (i) vide number G.S.R. 945(E), dated the
30th December, 2011, except as respects things done or omitted to
be done before such supersession, the Central Government, on
being satisfied that it is necessary in the public interest so to do,
hereby grants rebate of service tax paid(hereinafter referred to as
rebate) on the taxable services which are received by an exporter of
goods (hereinafter referred to as the exporter) and used for export
of goods, subject to the extent and manner specified herein below,
namely:- ......
4.5 From the perusal of the above reproduced notification it is
evident that the notification is complete code in itself as it-
creates the right to rebate of the service tax paid on the
input services received by the exporter of the goods for use
in the export of the goods;
Provides for the manner in which the notification providing
for the rebate of service tax paid on such input services shall
be given effect to;
Provides for the required safeguards and conditions in
implementing the scheme as per notification; ¬ Provides for
the period of limitation within which such refund claim needs
to be filed;
Provides for the manner in which rebate/ refund claim shall
be processed by the jurisdictional officer and also the time
period in which the claim has to be processed;
Provides that no CENVAT Credit off the service tax paid on
the input services has been taken.
However, the notification does not provide for any limitation on
the period in which the goods have to be exported from the date
of receipt of the input service on the payment of service tax.
Impugned order does not analyze the notification in dispute but
has misdirected itself by going into the transitional provisions as
per the Central Goods and Service Tax Act, 2017. From the plain
wording of the notification it is evident that the right to claim the
rebate has accrued to the appellant (exporter) on the date of
payment of the service tax on input services received by him for
use in the export of goods. Assistant Commissioner has in para
5 (iii) recorded a specific finding in this regard which was not
disputed by the revenue in their appeal before the
Commissioner (Appeal) nor Commissioner (Appeal) has recorded
any finding to this effect.
4.6 In the case of Eicher Motors Ltd. [(1999) 2 SCC 361], Hon'ble
Apex Court observed: -
"5. Rule 57-F(4-A) was introduced into the Rules pursuant to the
Budget for 1995-96 providing for lapsing of credit lying unutilised on
16-3-1995 with a manufacturer of tractors falling under Heading No.
87.01 or motor vehicles falling under Headings Nos. 87.02 and 87.04
or chassis of such tractors or such motor vehicles under Heading No.
87.06. However, credit taken on inputs which were lying in the
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ST/85773/2021
factory on 16-3-1995 either as parts or contained in finished products
lying in stock on16-3-1995 was allowed. Prior to the 1995-96 Budget,
the Central excise/additional duty of customs paid on inputs was
allowed as credit for payment of excise duty on the final products, in
the manufacture of which such inputs were used. The condition
required for the same was that the credit of duty paid on inputs could
have been used for discharge of duty/liability only in respect of those
final products in the manufacture of which such inputs were used.
...................
As pointed out by us that when on the strength of the Rules available, certain acts have been done by the parties concerned, incidents following thereto must take place in accordance with the Scheme under which the duty had been paid on the manufactured products and if such a situation is sought to be altered, necessarily it follows that the right, which had accrued to a party such as the availability of a scheme, is affected and, in particular, it loses sight of the fact that the provision for facility of credit is as good as tax paid till tax is adjusted on future goods on the basis of the several commitments which would have been made by the assessees concerned. Therefore, the Scheme sought to be introduced cannot be made applicable to the goods which had already come into existence in respect of which the earlier Scheme was applied under which the assessees had availed of the credit facility for payment of taxes. It is on the basis of the earlier Scheme necessarily that the taxes have to be adjusted and payment made complete. Any manner or mode of application of the said Rule would result in affecting the rights of the assessees.
6. We may look at the matter from another angle. If on the inputs, the assessee had already paid the taxes on the basis that when the goods are utilised in the manufacture of further products as inputs thereto then the tax on these goods gets adjusted which are finished subsequently. Thus, a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of the Act does not enable the authorities concerned to make a rule which is impugned herein and, therefore, we may have no hesitation to hold that the Rule cannot be applied to the goods manufactured prior to 16-3-1995 on which duty had been paid and credit facility thereto has been availed of for the purpose of manufacture of further goods."
4.7 In case of Dai Ichi Karkaria [1999 (112) E.L.T. 353 (S.C)] Hon'ble Supreme Court has category laid down as follows:
"17. It is clear from these Rules, as we read them, that a manufacturer obtains credit for the excise duty paid on raw material to be used by him in the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgement thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provision in the Rules which provides for a reversal of the credit by the excise authorities except where it has been illegally or irregularly taken, in which event it stands cancelled or, if utilised, has to be paid for. We are here really concerned with credit that has been validly taken, and its benefit is available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in 14 ST/85773/2021 its excisable product. The credit is, therefore, indefeasible. It should also be noted that there is no co-relation of the raw material and the final product; that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available."
4.8 Same view has been expressed as per the Section 173 and 174 (2) of the Central Goods and Service Tax Act, 1994 while repealing the Chapter V of The Finance Act, 1994. The said provisions are reproduced below:
Section 173. Amendment of Act 32 of 1994.- Save as otherwise provided in this Act, Chapter V of the Finance Act, 1994 shall be omitted.
Section 174. Repeal and saving.- (1) Save as otherwise provided in this Act, on and from the date of commencement of this Act, .... (2) The repeal of the said Acts and the amendment of the Finance Act, 1994 (hereafter referred to as "such amendment" or "amended Act" , as the case may be) to the extent mentioned in the sub-
section (1) or section 173 shall not- (a) .....; or (b) .....; or (c) affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders under such repealed or amended Acts: Provided ....; or (d) ......; or (e) affect any investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other legal proceedings or recovery of arrears or remedy in respect of any such duty, tax, surcharge, penalty, fine, interest, right, privilege, obligation, liability, forfeiture or punishment, as aforesaid, and any such investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and other legal proceedings or recovery of arrears or remedy may be instituted, continued or enforced, and any such tax, surcharge, penalty, fine, interest, forfeiture or punishment may be levied or imposed as if these Acts had not been so amended or repealed; (f) affect any proceedings .....
4.8 The observation made by the Commissioner (Appeals) in respect of the provisions of Section 173 of The Central Goods and Service Tax Act, 2017, are in respect of the repeal of notification 41/2012-ST without even referring to the Section1 74 (2) ibid, cannot impact the rights accrued to the appellant prior to such repeal. As is evident from the wording of the notification and the decision of the Hon'ble Supreme Court the right to rebate has accrued to the appellant at the time of the receipt of the specified input services for use in the export of goods by the exporter, and such right could not have been extinguished by the subsequent event of repeal of Chapter V of the Finance Act, 1994. Interpreting the section 174 of the Central Goods and Service tax Act, 2014, Hon'ble Jharkhand High Court has in the case of Rungta Mines Limited [Order dated 15.02.2022 in Writ Petition (T) No 2245/2020] observed as follows: 46. Section 174 of the CGST Act read with section 6 of the General Clauses Act saves the right acquired, accrued or 15 ST/85773/2021 vested under the existing law and does not create any new right which never existed on the appointed day i.e. on 01.07.2017 under the existing law."
4.9 I am not inclined to pronounce upon the applicability of the decisions referred to by the counsel for the appellant during the course of arguments which may or may not be applicable to the facts of the present case. However, in view of the decisions referred above I am unable to sustain the impugned order."
11. In view of the settled position of law, as discussed in the above referred cases, the issue arising out of the present dispute is no more open for any debate and as such, the impugned order dated 30.04.2020 passed by the learned Commissioner (Appeals-III) is liable to be set aside.
12. Therefore, the impugned order is set aside and the appeal is allowed in favour of the appellants.
(Operative portion of the order pronounced in open Court) (M.M. PARTHIBAN) MEMBER (TECHNICAL) Sinha