Custom, Excise & Service Tax Tribunal
Sri Chakra Poly Plast India Pvt Ltd vs Medchal - G S T on 17 January, 2024
(1)
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Single Member Bench
Court - II
Excise Appeal No. 30369 of 2022
(Arising out of Order-in-Appeal No.HYD-EXCUS-MD-AP2-006 to 007-22-23-CE
dt.29.04.2022 passed by Commissioner of Customs &Central Tax, Hyderabad)
Sri Chakra Poly Plast India Pvt Ltd .... Appellant
Plot No.10/R2, Phase III, IDA Pashmylaram,
Sangareddy Dist., Telangana - 502 307
VERSUS
Commissioner of Central Tax .... Respondent
Medchal - GST III Floore, Medchal GST Bhavan, Lakdikapul, Hyderabad - 500 004 Appearance Shri P. Venkata Prasad, CA for the Appellant.
Shri V.R. Pavan Kumar, AR for the Respondent.
Coram:
HON'BLE Mr. R. MURALIDHAR, MEMBER (JUDICIAL) FINAL ORDER NO. A/30023/2024 Date of Hearing: 17.01.2024 Date of Decision: 17.01.2024 [Order per: R. MURALIDHAR] The Appellant - M/s Sri Chakra Poly Plast India Pvt Ltd., was not in a position to fulfil the export obligation for the capital goods procured by them under EPCG License. They have calculated the Customs Duty foregone and paid the total Customs Duty of Rs.11,32,417/-, which consisted of CVD+SAD of Rs.2,97,797/-. Since the Customs Duty payment was done on 20.11.2020 under the present GST regime, the Appellants were not in a position to take the Cenvat Credit of this amount, which in the normal course would have been eligible to them under the previous Central Excise regime. Therefore, the Appellants filed the refund claim for Rs.2,97,797/-. They prayed that since they were not in a position to take the Cenvat Credit of this amount, the same may be granted as cash refund under Sec.142(3) of CGST Act, 2017. After due (2) process, the Lower Authorities dismissed the refund claim. Being aggrieved, the Appellant is before the Tribunal.
2. The issue, as to whether any Appeals on account of such rejection of refund claims which were being filed on account of eligible Cenvat Credit had reached the Larger Bench. The Larger Bench had to decide as to whether the jurisdiction for such Appeals lies before the CESTAT or before the Tribunal to be constituted under the CGST Act 2017.Vide their Interim Order No. 40021/2023 dated 21.12.2023, the Larger Bench, in the case of Bosch Electrical Drive India Pvt Ltd, has gone through the submissions from both sides and has come to the following conclusion:
"41. Before examining whether an appeal would lie to the Tribunal against an order passed under section 142 of the CGST Act, it would be appropriate to examine whether an appeal would lie to the Appellate Tribunal constituted under the CGST Act.
42. Under section 112 of the CGST Act, an appeal would lie before the Appellate Tribunal constituted under the CGST Act against an order passed under section 107 or section 108 of the CGST Act. It is, therefore, clear that against an order passed under sub-section (3) of section 142 of the CGST Act an appeal would not lie before the Appellate Tribunal constituted under the CGST Act.
43. It now needs to be examined whether the Tribunal would have the jurisdiction to entertain an appeal filed against an order passed under sub- section (3) of section 142 of the CGST Act.
44. Under sub-section (3) of section 142 of the CGST Act, the claim for refund of any amount of CENVAT credit has to be disposed of in accordance with the provisions of the existing law. The existing law would be Chapter V of the Finance Act and the Central Excise Act. If an application for refund of CENVAT credit had been filed at a point of time when the CGST Act had not been enacted, an appeal would lie before the Tribunal against an order passed on the application filed for refund of CENVAT credit. What has to be seen is whether an appeal can be filed before the Tribunal after the coming into force of the CGST Act against an order passed under sub-section (3) of section 142 of the CGST Act. In view of the specific provisions of sub-section (3) of section 142 of the CGST Act, every claim for refund after 01.07.2017 has to be disposed of in accordance with the provisions of the existing law i.e. Chapter V of the Finance Act and the Central Excise Act. This would mean that the appellate provisions would continue to remain the same. This position is also explicit from the provisions of sub-section (6)(b) of section 142 of the CGST Act, wherein it has been provided that every proceeding of (3) appeal, review or reference relating to recovery of 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 the existing law.
45. Section 174(2)(f) of the CGST Act also provides that the repeal of the Central Excise Act under section 174(1) and amendment of the Finance Act under section 173 shall not affect any proceedings including that relating to an appeal instituted before, on or after the appointed day under the said amended Act or repealed Acts and such proceedings shall be continued under the said amended Act or the repealed Acts as if the CGST Act had not come into force and the said Acts had not been amended or repealed.
46. There is, therefore, no manner of doubt that an appeal against an order passed under section 142 of the CGST Act would lie to the Tribunal.
47. This view also gains support from the fact the legislative intent could not have been to deprive either an assessee or the Revenue from the right of an appeal since an appeal against an order passed under section 142 of the CGST Act would not lie to the Appellate Tribunal constituted under the CGST Act." [Emphasis supplied]
3. In view of this decision, I take up the Appeal for disposal.
4. Learned Advocate appearing on behalf of the Appellant submits that the issue is no more res integra. The very issue as to whether CVD+SAD paid subsequent to 2017 are eligible for cash refund under Sec.142(3) of the CGST Act 2017, has been decided in favour of the importer/Assessees in the following cases:
a) Mithila Drugs Pvt Ltd vs CGST, Udaipur [2022 (3) TMI 58 - CESTAT New Delhi]
b) Clariant Chemicals India Ltd vs CCE & ST, Raigad [2022 (10) TMI 796 - CESTAT Mumbai]
c) ITCO Industries Ltd vs CGST & CE, Salem [2022 (6) TMI 1040 - CESTAT Chennai]
d) Flexi Caps & Polymers Pvt Ltd vs CGST & CE, Indore [2021 (9) TMI 917 -
CESTAT New Delhi]
5. He further submits that on the issue as to whether the Service Tax paid on RCM basis, after 01.07.2017 is eligible for Cenvat Credit would be eligible or not for cash refund in terms of Sec.142(3) of CGST Act 2017 has been held in favour of the Assessee in by this Bench the case of OSI Systems Pvt Ltd vs CCT, Rangareddy [2022 (9) TMI 801 - CESTAT Hyderabad].
6. Therefore, he prays the present Appeal may be allowed.
(4)7. Learned AR submits that the Larger Bench of the Tribunal in Bosch Electrical Drive India Pvt Ltd only decided the issue of jurisdiction and has not decided that the Appellant would be eligible to get the cash refund under Sec.142(3). He places reliance on the case law of Servo Packaging Ltd vs CGST & CE, Puducherry [2020 (373) ELT 550 (Tri-Chennai)] and the Final Order No. 40158-40171/2022 dated 06.05.2022 in the case of Aurobindo Pharma Ltd vs CC, Chennai-II. He reiterates the findings of the Lower Authorities. Accordingly, he submits that the present Appeal is required to be dismissed.
8. Heard both sides and perused the documents and the cited case laws.
9. On going through the copy of challan produced by the Appellant, it is seen that it has been submitted that Duty of Customs amounting to Rs.11,32,417/- has been paid, in which CVD+SAD of Rs.2,97,797/- are integral part. From the Order portion of OIO, it is seen that there is no dispute that the amount of Rs.2,97,797/- is on account of payment of CVD & SAD only.
10. In the case of Mithila Drugs Pvt Ltd vs CGST, Udaipur [2022 (3) TMI 58 - CESTAT New Delhi], the Delhi Bench has held as under:
"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-appeal. Such refund shall be granted within a period of 45 days from the date of receipt of order along with interest under Section11BB of the Central Excise Act. The impugned orders are set aside." [Emphasis supplied] (5)
11. In the case of Clariant Chemicals India Ltd vs CCE & ST, Raigad [2022 (10) TMI 796 - CESTAT Mumbai], the Mumbai Bench has held as under:
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 Section142 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." [Emphasis supplied]
12. In the case of ITCO Industries Ltd vs CGST & CE, Salem [2022 (6) TMI 1040 - CESTAT Chennai], the Chennai Bench has held as under:
(6)11. From the narration of facts, it can be seen that Department has rejected the claims invoking Rule 9(1)(b)of Cenvat Credit Rules, 2004. The said provision has already been reproduced above. The Department is ofthe view that credit is not eligible as appellant has paid the duties only after issuing a demand notice. Onperusal of the alleged demand notice, it is merely in the nature of an intimation letter and has not been issuedinvoking any provisions of Customs law or Excise law. Further, in such intimation also, there is no allegationof any fraud, collusion or suppression of facts with intent to evade payment of duty. There is no evidenceplaced before me to establish that the duties were paid after adjudication and rendering a finding of fraud,collusion or suppression of fact with intent to evade payment of duty. In such circumstances, the credit cannotbe denied. I hold that the appellant is eligible for credit of CVD and SAD paid by them. The Tribunal in thecase of Circor Flow Technologies (supra) and Mithila Drugs Pvt. Ltd. (supra) had analysed a similar issue. InM/s.Mithila Drugs Pvt. Ltd., the facts are identical to that of the instant case. The relevant paragraphs read asunder:
"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.(7)
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-appeal. Such refund shall be granted within a period of 45 days from the date of receipt of order along with interest under Section 11BB of the Central Excise Act. The impugned orders are set aside."
12. After appreciating the facts and evidence as well as applying the principles of law laid in the above decisions, I am of the view that the rejection of refund claims cannot be justified. The impugned orders are set aside. Appeals are allowed with consequential relief, if any, as per law." [Emphasis supplied]
13. In the case of Flexi Caps & Polymers Pvt Ltd vs CGST & CE, Indore [2021 (9) TMI 917 - CESTAT New Delhi], the Delhi Bench has held as under:
7. Apparently, the said Cenvat Credit could not be availed any more due to the erstwhile law i.e. Central Excise Act, 1944 being taken over by New GST Act, 2017. Perusal thereof shows that the Act contains a provision to take care of such unutilized credits of the assessee to be refunded to them in cash. The relevant provision is Section 142 of GST Act, with sub-section (3) thereof reads as follows:-
"(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 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:"
and sub-section (8) (a) and (b) reads as follows:-
"(8) (a) where in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day, under the existing law, any amount of tax, interest, fine or penalty becomes recoverable from the person, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so covered shall not be admissible as input tax credit under this Act;
(b)where in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day, under the existing law, any amount of tax, interest, fine or penalty becomes refundable to the taxable person, the same shall be refunded to him in cash under the said law, notwithstanding anything to the contrary contained in the said 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."
In view of these provisions, denying the said entitlement, that too, on the ground that the letter of DGFT cannot be considered as the assessment order is not appropriate to my opinion because the fact still remains is that the requisite duty stands paid in full by the appellant which entitles the appellant to have credit thereof though in the form of cash in terms of the provisions of the new Act. Hence, I hold that the view formed by Commissioner (8) (Appeals) while rejecting the refund is not appropriate. Rather it is beyond the intention of the Legislature." [Emphasis supplied]
14. In all these case laws, the issue was identical i.e., as to whether CVD+SAD as part of Custom Duties paid subsequent to 01.07.2017 on account of non-fulfilment of Export Obligation, are eligible for cash refund when the Appellant cannot take these amounts as Cenvat Credit. The co-ordinate Benches of Tribunal have been consistently holding that the Appellant would be eligible for Cenvat Credit. The issue in the present appeal is squarely is covered by these decisions.
15. In the case of OSI Systems Pvt Ltd vs CCT, Rangareddy [2022 (9) TMI 801 - CESTAT Hyderabad], this Bench while dealing the issue as to whether the Service Tax paid on RCM basis subsequent to 01.07.2017, which otherwise is eligible as Cenvat Credit, can be taken as cash refund under Sec.142(3) of CGST Act, 2017 was considered and has held as under:
"7. Having considered the rival contentions, I find that under transitional provision under section 142(3) of CGST Act, the limitation has been done away with and the only thing required for refund under the facts and circumstances is to see whether unjust enrichment is attracted. In the facts and circumstances, I hold that no unjust enrichment is attracted as the appellant have admittedly paid service tax in August, 2018 out of their own pocket. Accordingly, I allow this appeal and set aside the impugned order. The adjudicating authority is directed to grant refund within a period of 60 days from the date of receipt of copy of this order along with interest under section 11BB of the Central Excise Act." [Emphasis supplied]
16. I find that the ratio laid down in the above case law is also squarely applicable to the facts of the present case.
17. Now coming to the case law of Servo Packaging Ltd and Aurobindo Pharma Ltd cases, cited by learned AR, subsequently Chennai Bench itself has passed another Order holding that Appellant would be eligible for cash refund. Further, the view of the Bench in the cases of Servo Packaging Ltd & Aurobindo Pharma Ltd were prior to the clear view brought in by the Larger Bench in the case of Bosch Electrical Drive India Pvt Ltd (cited supra), which has held as under:
"49. In the present case, the service tax was paid under the provisions of Chapter V of the Finance Act and refund was claimed under sub-section (3) of section 142 of the CGST Act, under which the claim was required to be (9) disposed of in accordance with the provisions of the existing law. Therefore, even if the service tax had been deposited by the appellant after 01.01.2017, nonetheless the refund of any amount of the CENVAT credit could be claimed only under subsection (3) of section 142 of the CGST Act and against this order an appeal will lie to the Tribunal."[Emphasis supplied]
18. Therefore, I find all the case laws cited by learned AR cannot be applied now. On the other hand, the decisions of Mithila Drugs Pvt Ltd (supra), Clariant Chemicals India Ltd (supra) and ITCO Industries Ltd (supra) cited by learned Counsel read with Bosch Electrical Drive India Pvt Ltd (Larger Bench) are squarely applicable. Therefore, following the decisions of these case laws, I set aside the impugned Order and allow the Appeal with consequential relief. The Adjudicating Authority is directed to grant the refund along with interest, which is to be calculated from the initial date of filing the refund claim.
(Dictated and pronounced in the open Court) (R. MURALIDHAR) MEMBER (JUDICIAL) Veda