Custom, Excise & Service Tax Tribunal
Granules India Limited vs Principal Commissioner Of ... on 20 February, 2024
(1) Appeal No. C/30323/2021
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
HYDERABAD
REGIONAL BENCH - COURT NO. - I
Customs Appeal No. 30323 of 2021
(Arising out of Order-in-Appeal No.HYD-CUS-000-APP-108-20-21(APP-I) dated
15.01.2021 passed by Pr. Commissioner of Customs & Central Tax (Appeals), Hyderabad)
Granules India Ltd., .. APPELLANT
2nd Floor, 3rd Block,
My Home Hub,
Madhapur,
Rangareddy,
Telangana - 500 081.
VERSUS
Commissioner of Central Tax .. RESPONDENT
Hyderabad - Customs Kendriya Shulk Bhavan, L.B. Stadium Road, Basheerbagh, Hyderabad, Telangana - 500 004.
APPEARANCE:
Shri Karan Talwar, Advocate for the Appellant.
Shri P. Amaresh, Authorised Representatives for the Respondent. CORAM: HON'BLE Mr. ANIL CHOUDHARY, MEMBER (JUDICIAL) HON'BLE Mr. A.K. JYOTISHI, MEMBER (TECHNICAL) FINAL ORDER No. A/30182/2024 Date of Hearing:20.02.2024 Date of Decision:20.02.2024 [ORDER PER: ANIL CHOUDHARY] The issue in this appeal is whether vide impugned Order-in-Appeal the Commissioner (Appeals) have rightly rejected the refund of CVD + SAD paid for regularisation of Advance License (Import License), which have been deposited after 01.07.2017 in relation to imports prior to 01.07.2017.
2. The brief facts are that the appellant is registered with the Department. Appellant had imported duty free inputs under Advance Authorisation prior to 01.07.2017, for use of such goods for manufacture and export thereof and or under the condition to fulfil export obligation.
3. The appellants on finding that in respect of certain Advance Authorisation they could not fulfil the export obligation, paid the CVD (in lieu of Central Excise) and SAD (additional duty of Customs in lieu of Sales Tax) with CESS along with interest during the period 2018 - March 2019 (GST Regime) under the provisions of the erstwhile Central Excise and Service Tax Regime the appellant was entitled to take credit of the CVD + SAD paid.
(2) Appeal No. C/30323/2021 The same could not be taken due to change of Regime to GST with effect from 01.07.2017. The appellant due to imposition of GST with effect from 01.07.2017 could not take credit (although available earlier prior to 01.07.2017) as there was no provision in GST to avail the input credit of the duties paid for regularisation of benefit on default under Advance Authorisation, hence they filed refund claim under the provision of Section 142(3) of the CGST Act read with Section 174 ibid.
4. That under the GST Regime, the CVD + SAD is known as IGST which on payment at the time of import is eligible for input tax credit to the importer assessee. In the transitional provisions under GST, it has been clarified that when cenvat credit is eligible and the same cannot be granted as the Central Excise provisions have been subsumed in the GST, the amount of Cenvat Credit should be granted as Cash Refund. Accordingly, the appellants filed 12 Refund Claims for the CVD + SAD paid by them, requesting that the Cenvat Credit eligible to them be granted as a cash refund. Alternatively, the Appellant had also submitted, that this amount could be granted to them under the Electronic Credit Ledger to enable them to utilize towards payment of GST.
5. Revenue issued Show Cause Notice dated 12.02.2020 on the only allegation that the Adjudicating Authority did not have jurisdiction under Section 142(3) of the CGST Act to entertain the claim of refund and further it was not a case of excess/erroneous payment of duty. The Show Cause Notice was adjudicated vide Order-in-Original dated 17.08.2020 and the total refund claim for Rs. 3,28,75,733/- (CVD + SAD) was rejected on contest. It was also observed that there is no provision/notification/ rule/regulation in the existing law prior to 01.07.2017, allowing for cash refund of cenvatable components on the grounds that input tax credit cannot be availed during the GST Regime. Further observed, the cenvatable component of duty paid during the alternate taxation regime cannot be a ground for seeking cash refund under Section 142(3).
6. Being aggrieved, the appellant assessee is before this Tribunal.
7. It is submitted that the subject issue is no longer res integra as the Larger Bench of the Tribunal in the case of Bosch Electrical Drive India Private Limited Vs Commissioner of Central Tax, Chennai - 2023 (12) TMI 1145 - CESTAT - Chennai-LB] wherein it has been held that the only way to get the refund of the amount which otherwise would have been available (3) Appeal No. C/30323/2021 under Cenvat, is to rely on Section 142(3) and file the refund claim accordingly.
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 22 ST/40010/2020 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 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.
8. Identical issue has been decided by this Hon'ble CESTAT in an identical matter of Sri Chakra Poly Plast India Pvt Ltd., Vs Commissioner of Central Tax, Medchal [2024 (1) TMI 927 - CESTAT - HYDERABAD] wherein it held:
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 (4) Appeal No. C/30323/2021 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.
9. Further, urges in the instant proceedings, it is no where questioned regarding the eligibility of the component of CVD + SAD to Cenvat Credit under the erstwhile regime. The appellants relies on the Order of the Hon'ble High Court of Madras in KG Denim Ltd., Vs CESTAT, Chennai [2017 (7) GSTL 422 (Mad.)] wherein it was held that if the Cenvat Credit cannot be given back as Cenvat, then the amount in question is required to be granted by way of cash refund.
10. Learned Counsel further places reliance also on the following rulings:
Sri Chakra Poly Plast India Pvt Ltd., Vs Commissioner of Central Tax, Medchal-GST [2024 (1) TMI 927 - CESTAT, Hyderabad] M/s Bosch Electrical Drive India Pvt Ltd., Vs Commissioner of Central Tax, Chennai [2023 (12) TMI 1145 - CESTAT-CHENNAI-LB] New Age Laminators Pvt Ltd., Vs Commissioner, C.Ex., GST, ALWAR [2022 (381) ELT 88 (Tri-Del)] (5) Appeal No. C/30323/2021 OSI Systems Pvt Ltd., Vs Commissioner of Central Tax, Rangareddy, GST [2022 (9) TMI 801 - CESTAT, HYDERABAD] M/s Indo Tooling Pvt Ltd., Vs Commissioner, Central Goods and Service Tax & Central Excise, Indore [2022 (3) TMI 1100 - CESTAT-
NEW DELHI] M/s Jai Mateshwaari Steels Pvt Ltd., Vs Commissioner, CGST, Dehradun [2022 (3) TMI 49 - CESTAT-NEW DELHI] M/s Jagannath Polymers Pvt Ltd., Vs Commissioner, CGST, Jaipur [ 2021 (12) TMI 736 - CESTAT-NEW DELHI] Aurobindo Pharma Ltd., Vs Commissioner of Central Tax, Hydrabad [2024 (2) TMI 367 - CESTAT-HYDERABAD] Sri Chakra Poly Plast India Pvt Ltd., Vs Commissioner of Central Tax, Medchal-GST [Excise Appeal No. 30372 of 2022 - CESTAT-Hyderabad]
11. Learned AR for Revenue have opposed the appeal relying on the impugned order. He has also relied upon the rulings and findings as follows:
Final Order No. A/85339/2023 D.O.D. 03.02.2023 M/s Galaxy Surfactants Ltd., Vs CCE - Raigad Kaleeshari Refinery P Ltd., Vs Commr CGST & CEX, Chennai [2021 (378) ELT 655 (Tri-Chennai)] Interim Order No. 40021/2023 D.O.D. 21.12.2023 Bosch Electrical Drive India Pvt Ltd., Vs CGST & C.Ex Servo Packing Ltd., Vs Commr of CGST & CCE, Puducherry [2020 (373) ELT 550 (Tri-Chennai)] Union of India Vs Filco Trade Centre Pvt Ltd., [2022 (63) GSTL 162 (SC)] Union of India Vs Filco Trade Centre Pvt Ltd., [2022 (63) GSTL 385 (SC)] CBI & Circular No. 180/12/2022-GST dated 09.09.2022 ALD Automotive Pvt Ltd., Vs Commercial Tax Officer [2018 (364) ELT 3 - (SC)] Rungta Mines Ltd., Vs Commr CGST and CE, Jamshedpur [2022 (1) Centax 151 (Jhar)]
12. Having considered the rival contentions, we find that the payment of CVD and SAD subsequently during the GST regime, for the imports made under advance authorisation prior to 30.06.2017 is not disputed. It is also not disputed that the Appellant have paid the CVD and SAD during the period August 2018 to March 2019, by way of regularisation of the shortfall in fulfilment of export obligation. We find that Section 142(3) read with 142(5) of the GST act, provides that every claim for refund 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 the existing law and any amount eventually accruing to him, shall be paid in cash, (6) Appeal No. C/30323/2021 notwithstanding anything to the contrary contained under the provisions of existing law other than the provision of sub-section (2) of section 11B of the Central Excise Act (unjust enrichment).
13. Further from a conjoint reading of subsection (3) (5) and (8A) of Section 142 of the CGST Act it is evident than that an assessee is entitled to claim refund of CVD and SAD paid after the appointed day, under the existing law, and such claim has to be disposed of according to the provisions of the existing law. As the Appellant was admittedly entitled to Cenvat credit of the said amount of Rs. 3,28,75,733/-, which is now no longer available due to implementation of GST regime, it is held that they are entitled to refund of the said amount.
14. The ruling of Hon'ble Jharkhand Court in Rungta Mines Ltd., [2022 (1) Centax 151 (Jhar)] is not applicable to the facts of this appeal, being different.
15. In view of our observations and findings hereinabove, we allow this appeal and set aside the impugned order. We further direct the Adjudicating Authority to grant refund of the said amount to the Appellant within a period of 45 days from the date of receipt of copy of this Order along with interest as specified under Section 11BB of the Central Excise Act.
16. Appeal allowed (Operative part of this Order was pronounced in court on conclusion of the hearing) (ANIL CHOUDHARY) MEMBER (JUDICIAL) (A.K. JYOTISHI) MEMBER (TECHNICAL) jaya