Custom, Excise & Service Tax Tribunal
Asiatic Drugs And Pharmaceuticals Pvt ... vs Alwar on 13 May, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH, COURT NO. 1
Excise Appeal No. 53685 of 2023
(Arising out of Order-in-Appeal No. 04(RLM)CE/JPR/2023 dated 25.01.2023 passed by
Commissioner (Appeals), Customs, Central Excise and CGST, Jaipur)
M/s Asiatic Drugs & Pharmaceuticals Pvt. Ltd. ...Appellant
C-826, RIICO Industrial Area,
Phase-II Bhiwadi-301019
District Alwar (Rajasthan)
VERSUS
Commissioner, CGST ...Respondent
A Block, Surya Nagar, Alwar,
Rajasthan 301001
APPEARANCE:
Shri R.S. Sharma, Advocate for the Appellant
Shri Rakesh Agarwal, Authorized Representative of the Department
CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)
Date of Hearing: 27.11.2024
Date of Decision: 13.05.2025
FINAL ORDER No. 50648/2025
JUSTICE DILIP GUPTA:
M/s Asiatic Drugs & Pharmaceuticals Pvt. Ltd. 1 has filed this
appeal to assail the order dated 25.01.2023 passed by the
Commissioner (Appeals) Customs, Central Excise and CGST, Jaipur 2 by
which the order dated 24.05.2021 passed by the Assistant
Commissioner rejecting the refund claim filed by the appellant has been
upheld.
1. the appellant
2. the Commissioner (Appeals)
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2. The appellant had claim refund in respect of CENVAT credit of
Countervailing Duty 3 and Special Additional Duty 4 paid by the appellant.
The Commissioner (Appeals), while upholding the order passed by the
Assistant Commissioner, observed as follows:
8. As regarding admissibility of refund in respect of
CENVAT Credit of CVD/SAD paid by the appellant, I find
that-
a. The appellant has not fulfilled export
obligation in respect of Advance Authorisation
Nos. 0510397229 dated 07/01/2016,
0510399240 dated 27/06/2016 and
0510399241 dated 27/06/2016.
b. Accordingly, the appellant had paid BCD,
CVD, SAD & CESS along with applicable
interest vide challan Sr. No. 006856, 006853,
006854, 006855 all dated 22/10/2018 and No.
2368 and 2369 both dated 28/09/2018.
c. As per section 142 (6)(b) of the CGST
Act, 2017, the amount paid by the
appellant due to non-fulfillment of their
obligations for exports made under
Advance Authorisation is not admissible
as Input Tax Credit. Thus, the appellant is
not entitled to refund of the Customs
duties (CVD & SAD).
d. Payments of BCD, CVD, SAD & CESS
made on account of non fulfillment of
export obligation against Advance
Authorizations are not admissible as valid
Input Tax Credit under the provisions of
Rule 9(1) of the CENVAT Credit Rules,
2004 as said duties were paid by the
appellant on account of contraventions of
the provisions of FTP as well as
contravention of Customs Law.
3. CVD
4. SAD
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e. In similar issue in the matter of M/s.
Servo Packaging Ltd. vs. Commissioner of
GST and C Ex. Puducherry reported at
2020(373) ELT 550 (Tri.-Chennai),
Hon'ble CESTAT dismissed the appeal,
which was also duly discussed in
impugned OIO by the Adjudicating
Authority.
(emphasis supplied)
3. The appellant is a manufacturer and exporter of Cefadroxil
Monohydrate and Amoxicillin Trihydrate. The appellant imported raw
materials Parahydroxy Phenylglycine Base and Aminopenicillanic Acid in
the pre-Goods and Service Tax regime against Advance Authorization
licenses for use in the manufacture of final products to fulfill the export
obligation. It was a condition of import/advance licence that in event of
failure to fulfill export obligation, the importer will pay customs duty
with interest. As the appellant could not fulfill part of export obligation
in respect of some raw materials, the appellant claims that it paid
customs duty, CVD & SAD voluntarily after implementation of the Goods
and Service Tax regime in 2018 and intimation letters dated
01.10.2018, 01.10.2018 & 05.10.2018 were sent to the
Assistant/Deputy Commissioner of Customs, Licensing, Air Cargo
(Import), New Delhi regarding voluntary payment of duty against
advance licenses. Thereafter, redemption letter/export obligation
discharge certificate dated 15.10.2019 against Advance Authorization
license dated 07.01.2016 was also issued by DGFT. Redemption
letter/export obligation discharge certificate against Advance
Authorization licenses dated 27.07.2016 and 27.07.2016 were also
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issued by DGFT. Custom Authorities also discharged all bonds against
Advance Authorizations.
4. As CVD and SAD were paid post implementation of the Goods and
Service Tax regime, the appellant could not avail eligible CENVAT credit
of CVD and SAD. The appellant, therefore, filed a refund application
dated 17.04.2019 which was received in office of the Assistant
Commissioner, CGST, Bhiwadi on 25.04.2019 for claim of CENVAT credit
of Rs. 68,06,074/-.
5. However, a show cause notice dated 23.07.2019 was issue to the
appellant to show cause as to why the refund claim should not be
rejected on the ground that in terms of section 142(6)(b) of the Central
Goods and Service Tax Act, 2017 5, the amount is not admissible as
input tax credit. The appellant filed a reply dated 09.08.2019 to the
show cause notice and inter alia submitted that the refund claim falls
under section 142(6)(a) of the CGST Act and the appellant is entitled to
refund.
6. The Assistant Commissioner, by order dated 21.08.2019, rejected
the refund claim on the following grounds:
(i) The appellant did not produce any evidence that it had
paid customs duties voluntarily.
(ii) The refund is not eligible under rule 9(1) of CENVAT
Credit Rules, 2004 6 on account of non-levy, short levy by
reason of fraud, collusion, wilful misstatement with intent to
evade duty, as it was alleged that the appellant was fully
aware of non-fulfilling of export obligation.
5. the CGST Act
6. the 2004 Credit Rules
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(iii) The transitional provisions under CGST Act do not talk
about refund of any payment made after 01.07.2017 to
discharge liability of existing laws.
7. The appellant filed an appeal before the Commissioner (Appeals)
against the said order dated 21.08.2019 on the ground that the case
falls under section 142(6)(a) of the CGST Act and that the appellant had
voluntarily paid customs duties foregone at the time of import of inputs.
An affidavit was also filed stating that CVD and SAD were paid
voluntarily.
8. The Commissioner (Appeals), by order dated 09.12.2020,
remanded the matter to the adjudicating authority with a direction to
make necessary inquiry regarding the correctness of the averment
made by the appellant that it had voluntarily paid the customs duties
forgone.
9. Against the said order dated 09.12.2020 passed by the
Commissioner (Appeals), Excise Appeal No. 50231 of 2021 was filed by
the appellant before the Tribunal, but during the pendency of said
appeal, the Assistant Commissioner by an order dated 24.05.2022 again
rejected the refund claim.
10. The appellant filed an appeal against the order dated 24.05.2022
before the Commissioner (Appeals), who by order dated 27.01.2023
rejected the appeal.
11. It is this order dated 24.05.2022 passed by the Commissioner
(Appeals) that has been assailed in this appeal.
12. Shri R.S. Sharma, learned counsel for the appellant submitted
that the issue involved in this appeal has been decided by the Tribunal
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in various decisions, to which reference shall be made in this order at
the appropriate stage. Learned counsel submitted that the decision of
the Tribunal in Servo Packaging Ltd. vs. Commr. of GST and C. Ex.,
Puducherry 7 is not applicable to the facts of the present case. Learned
counsel also submitted that the Commissioner (Appeals) failed to
appreciate that the appellant was entitled to refund of credit in cash
under section 142(3) of the CGST Act and that CVD and SAD had been
paid voluntarily by the appellant.
13. Shri Rakesh Agarwal, learned authorized representative appearing
for the department has, however, supported the impugned order and
has submitted that the issue stands covered by the decision of the
Jharkhand High Court in Rungta Mines Ltd. vs. Commissioner of
CGST and Central Excise, Jamshedpur 8. Learned authorized
representative also submitted that the decision of the Tribunal in
Assistant Commissioner (Review), CGST & Central Excise vs.
M/s. Shakti Pumps (I) Limited 9 would not be applicable to the facts
of the present case. Learned authorized representative also placed
reliance upon the decision of the Chennai Bench of the Tribunal in L & T
South City Projects vs. Commr. of GST & C. Ex., Chennai South 10
and a decision of a learned Member of the Hyderabad Bench of the
Tribunal in United Seamless Tubular Pvt. Ltd. vs. Commr. of
Central Tax, Rangareddy 11.
7. 2020 (373) E.L.T. 550 (Tri.- Chennai)
8. 2022 (67) G.S.T.L. 180 (Jhar.)
9. Excise Appeal No. 51131 of 2020 decided on 08.07.2024
10. 2019 (27) G.S.T.L. 569 (Tri.-Chennai)
11. 2019 (28) G.S.T.L. 244 (Tri.-Hyd.)
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14. The submissions advanced by the learned counsel for the
appellant and the learned authorized representative appearing for the
department have been considered.
15. The Commissioner (Appeals), as would be seen from paragraph 8
of the order dated 25.01.2023 reproduced above, has placed reliance
upon section 142(6)(b) of the CGST Act and rule 9(1) of the Credit
Rules as also to the decision of the Tribunal in Servo Packaging for
rejecting the refund claim.
16. The issue that arises for consideration in this appeal is as to
whether the appellant is entitled to claim refund of CENVAT credit in
cash on the amount of CVD and SAD paid under the existing law under
the provisions of section 142(3) of the CGST Act.
17. In order to appreciate this issue, it would be appropriate to refer
to the relevant provisions.
18. The term "assessment‟ has been defined in section 2(11) of the
CGST Act and it is as follows:
"2(11) "assessment" means determination of tax
liability under this Act and includes self-assessment, re-
assessment, provisional assessment, summary
assessment and best judgment assessment"
19. The term "existing law‟ is defined in section 2(48) of the CGST Act
and it is as follows:
"2(48) "existing law" means any law, notification,
order rule or regulation relating to levy and collection of
duty or tax on goods or services or both passed or
made before the commencement of this Act by
Parliament or any Authority or person having the power
to make such law, notification, order, rule or
regulation."
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20. Chapter XX of the CGST Act deals with "Transitional Provisions‟. It
contains, amongst others, sections 139, 140 and 142.
21. Section 139 of the CGST Act, which came into force on
22.06.2017, deals with "migration of existing taxpayers‟. Sub-section
(1) of section 139 is reproduced below:
"139 (1) On and from the appointed day, every person
registered under any of the existing laws and having a
valid Permanent Account Number shall be issued a
certificate of registration on provisional basis, subject to
such conditions and in such form and manner as may
be prescribed, which unless replaced by a final
certificate of registration under sub-section (2), shall be
liable to be cancelled if the conditions so prescribed are
not complied with."
22. Section 140 of the CGST Act came into force on 01.07.2017. Sub-
section (1) of section 140 is reproduced below:
"140 (1) A registered person, other than a person
opting to pay tax under section 10 shall be entitled to
take, in his electronic credit ledger, the amount of
CENVAT credit of eligible duties carried forward in the
return relating to the period ending with the day
immediately preceding the appointed day, furnished by
him under the existing law within such time and in such
manner as may be prescribed:
Provided that the registered person shall not be
allowed to take credit in the following circumstances,
namely:
(i) where the said amount of credit is not
admissible as input tax credit under this Act;
or
(ii) where he has not furnished all the returns
required under the existing law for the
period of six months immediately preceding
the appointed date; or
(iii) where the said amount of credit relates to
goods manufactured and cleared under such
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exemption notifications as are notified by
the Government."
23. Section 142 of the CGST Act came into force on 01.07.2017. Sub-
sections (3), (6)(a) and (6)(b), are reproduced below:
"142 (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 (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.
*****
(6) (a) 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 (1 of 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;10
E/53685/2023
(b) 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 existing law and if any amount of credit becomes recoverable as a result of such appeal, review or reference, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act."
24. Chapter XXI of the CGST Act deals with Miscellaneous Matters. Section 173, which is contained in Chapter XXI, deals with amendment of the Finance Act. It came into force on 01.07.2017 and is reproduced below:
"173. Amendment of Act 32 of 1994 Save as otherwise provided in this Act, Chapter V of the Finance Act, 1994 shall be omitted."
25. Section 174, which also came into on 01.07.2017, deals with repeal and saving. Sub-section (1) and clause (f) of sub-section (2) are reproduced below:
"174. Repeal and Saving (1) Save as otherwise provided in this Act, on and from the date of commencement of this Act, the Central Excise Act, 1944 (1 of 1944) (except as respects goods included in entry 84 of the Union List of the Seventh Schedule to the Constitution), the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955), the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, and the Central Excise Tariff Act, 1985 (5 of 1986 (hereafter referred to as the repealed Acts) are hereby repealed.
(2) The repeal of the said Acts and the amendment of the Finance Act, 1994 (hereafter referred to as "such 11 E/53685/2023 amendment" or "amended Act", as the case may be) to the extent mentioned in the sub-section (1) or section 173 shall not --
(a) *****
(b) *****
(c) *****
(d) *****
(e) *****
(f) affect any proceedings including that relating to an appeal, review or reference, 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 repealed Acts as if this Act had not come into force and the said Acts had not been amended or repealed."
26. The CENVAT Rules were made under section 37 of the Excise Act and section 94 of the Finance Act. Under rule 4(7), CENVAT credit in respect of input service was allowed, on or after the day on which the invoice, bill or, as the case may be, challan referred to in rule 9 was received. Under rule 9(1)(e) of the CENVAT Rules, credit can be taken on the basis of a challan evidencing payment of service tax, by the service recipient as the person liable to pay service tax. Section 173 of the CGST Act provides that save as otherwise provided in this Act, Chapter V of the Finance Act shall be omitted. Section 174(1) of the CGST Act further provides that save as otherwise provided in this Act, on and from the date of commencement of this Act i.e. 01.07.2017, the Excise Act and some other Acts referred to are repealed.
27. It is in the light of the aforesaid factual and legal position that the contentions that have been advanced by the learned counsel appearing for the appellant and the learned authorised representative appearing for the department have to be considered.
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28. It is not in dispute that the appellant could not fulfil the export obligations within the time specified in the Advance Authorization and it discharged the payment of duty and the appropriate CVD and SAD with interest after 01.07.2017, on which date the CGST Act was implemented. In terms of the 2004 Credit Rules, as applicable prior to 01.07.2017, the appellant was entitled to claim CENVAT credit of CVD and SAD paid on imports. As the 2004 Credit Rules were framed under the Excise Act, the appellant could not have claimed CENVAT credit in respect of the input service under the provisions of the 2004 Credit Rules after 01.07.2017 as they ceased to exist.
29. It transpires that the contention of the appellant in regard to the refund application before the Commissioner (appeals) was that it was filed under section 142(6)(a) of CGST Act whereas the contention of the department was that it was filed under section 142(6)(b) of the CGST Act. Neither of these two sub-sections of section 142 of the CGST Act are applicable in the present case. Section 142(6)(a) applies to proceedings of appeal, review or reference and sub-section (6)(b) applies to proceedings of appeal, review or reference relating to recovery of CENVAT credit. The application that was filed by the appellant was for refund of an amount of CENVAT credit paid under the existing law. It is section 142(3) of the CGST Act that would be relevant. Mere wrong reference to a particular section of the CGST Act for claiming refund would not be that material, if the refund application can be traced to section 142(3) to the CGST Act.
30. In Shakti Pumps, relied upon by learned counsel for the appellant, the issue that arose for consideration before the bench was whether Shakti Pumps was entitled to claim refund of CENVAT credit in 13 E/53685/2023 cash on the amount of CVD and SAD paid after the coming into force of the CGST Act under the provisions of section 142(3) of the CGST Act.
31. This is precisely the issue that arises for consideration in this appeal. After consideration of the relevant provisions of the CGST Act and the 2004 of the Credit Rules, the Division Bench of the Tribunal in Shakti Pumps observed as follows:
"34. Section 142, as noticed above, deals with Miscellaneous Transitional Provisions. Sub-section (3) provides that every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT credit 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, 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. However, 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 the CGST Act.
35. Thus, under sub-section (3) of section 142, the claim for refund of any amount of CENVAT credit has to be disposed of in accordance with the provisions of the existing law. "Existing law‟ under section 2(48) of the CGST Act means any law relating to levy and collection of duty or tax on goods or services or both passed or made before the commencement of the CGST Act. The existing law, therefore, would be Chapter V of the Finance Act and the Central Excise Act.
36. Section 173 of the CGST Act provides that save as otherwise provided in the CGST Act, Chapter V of the Finance Act, shall be omitted. Section 174(1) of the CGST Act provides that save as otherwise provided in the CGST Act, on or from the date of commencement of the CGST Act i.e. 01.07.2017, the Excise Act shall stand repealed. Upon repeal of the Excise Act, the 2004 Credit Rules automatically stood repealed. The 14 E/53685/2023 appellant, therefore, could not have claimed refund under rule 4(7) of the 2004 Credit Rules. The appellant could also not have taken in his electronic credit ledger the amount of the CENVAT credit under section 140(1) of the CGST Act because the service tax return had been filed before the deposit of the service tax, except in two cases where because of human error it could not be done. It is for this reason that the appellant had filed two applications under sub-section (3) of the section 142 of the CGST Act, which applications were rejected and the appeal filed by the appellant before the Commissioner (Appeals) was also rejected.
xxxxxxxxxx
55. Learned authorised representative also submitted that the transitional provisions under section 142 of the CGST Act in respect of CENVAT credit would be applicable only when CENVAT credit was taken prior to 30.06.2017.
56. Section 142(3) of the CGST Act does not contain such a stipulation.
57. This issue was examined by a Larger Bench of the Tribunal in M/s. Bosch Electrical Drive India Private Limited vs. Commissioner of Central Tax, Chennai (2023 (12) TMI 1145 - CESTAT Chennai) and the relevant portion of the order of the Larger Bench is reproduced below:
"8. The Deputy Commissioner, by order dated 24.04.2019, rejected the refund claim filed by the appellant for the reason that after the implementation of CGST Act on 01.07.2017, the CENVAT Rules ceased to be in force and the claim under section 142(3) of CGST Act cannot be considered to be under the "existing law‟ as the service tax was not paid in time but on 08.12.2017 after the CGST Act had come into force.
xxxxxxxxxxx
16. In the present case, the appellant had deposited the short payment of service tax 15 E/53685/2023 under the reverse charge mechanism in respect of import of service on 08.12.2017, after the time period prescribed for filing the last ST-3 Return had expired. This amount was, therefore, not reflected in the ST-3 Return. The CGST Act came into force w.e.f. 01.07.2017. The appellant, therefore, could not claim the transition of the input credit under section 140 of the CGST Act. The appellant could not also avail CENVAT credit under the CENVAT Rules as they were no longer in force after the introduction of the CGST Act.
17. It is for this reason that the appellant filed an application under section 142(3) of the CGST Act claiming refund of the amount of CENVAT credit paid by the appellant. This claim of the appellant was rejected by the Deputy Commissioner by the order dated 24.04.2019 and the appeal filed by the appellant before the Commissioner (Appeals) was also rejected by the order dated 21.09.2019.
xxxxxxxxxxx
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 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 sub-section (3) of section 142 of the CGST Act and against this order an appeal will lie to the Tribunal."
xxxxxxxxxxxx
62. Learned counsel for Shakti Pumps has, however, placed reliance upon the several Division Bench 16 E/53685/2023 decisions of the Tribunal wherein refund of CENVAT credit in cash has been granted.
63. In Granules India Ltd. vs. Commissioner of Central Tax Hyderabad, the Division Bench after placing reliance upon the Larger Bench decision of the Tribunal in Bosch Electrical held:
"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, 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/-, 17 E/53685/2023 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."
(emphasis supplied)
64. In Commissioner of Central Excise & Service Tax, Ahmedabad-I vs. Aculife Healthcare Private Limited17, the Division Bench observed:
"5. We find that the department sought to deny the refund of CVD and SAD paid by the appellant only on the ground that at the time of payment of CVD and SAD there was no provision of availing the Cenvat credit, therefore, it was alleged that the appellant was not in position to avail the Cenvat credit, therefore consequently even refund of the amount which is not cenvatable could not have been claimed. We find that the appellant have paid the CVD and SAD for the period prior to 01.07.2017 even though the payment was made subsequent to 01.07.2017. Therefore, since the duty is paid by the appellant are for the period when the Cenvat credit Rules was existing, the appellant were entitled for Cenvat credit during period prior to 01.07.2017. In CGST Act to deal with situation of the present case, special provision was made under Section 142(3) whereby when the assessee is not in a position to avail the Cenvat credit or utilize the same due to effect of GST regime from 01.07.2017 refund provision was enacted which specifically deals with the situation of refund of amount which is cenvatable as per existing law i.e. Central Excise Act, 1944 and Rules made thereunder. In the present case, the refund was made under the existing law i.e. section 11B of Central Excise Act, 1944 accordingly, the refund of SAD/CVD paid by the appellant which was 18 E/53685/2023 cenvatable at the time when the said duty was payable, It is clearly eligible for refund under Section 11B read with Section 142(3) of CGST Act, 2017. Therefore, in our considered view, the appellant are legally entitled for the refund of CVD/ SAD. As regard the judgments relied upon by the appellant as well as the Revenue, we find that the Revenue has filed the appeal on the sole ground that the adjudicating authority has rejected the claim relying on the Single Member Bench decision in the case of this Tribunal decision in the case of Sarvo Packaging Ltd. There are number of judgments by this Tribunal itself which are contrary to the decision of Sarvo Packaging Limited 2020 (373) ELT 550 (Tri. Chennai). Moreover, even after considering the Sarvo Packaging Limited decision (supra), the Tribunal‟s Single Member Bench in the case of Sri Chakra Polyplast India Private Limited (supra) after relying upon many other decision came to the conclusion that the appellant are entitled for the refund under Section 142(3) of CGST Act, therefore, the decision of Sarvo Packaging Limited stand departed. xxxxxxxxxx."
65. The same view was also taken by the Tribunal in (1) Kobe Suspension Co Pvt. Ltd. vs. Commissioner of Central Excise, Goods & Service Tax, Faridabad (2024 (6) TMI 180 - CESTAT Chandigarh); (2) M/s. JSW Steel Ltd. vs. Commissioner of Central Tax & Central Excise (Excise Appeal No. 20135 of 2021 decided on 31.05.2024); (3) M/s. Hindustan Equipments Private Limited vs. Commissioner of CGST & Central Excise, Indore (2024 (6) TMI 245 - CESTAT New Delhi); (4) M/s. Mithila Drugs Pvt. Ltd. vs. Commissioner, Central Goods and Service Tax, Udaipur (Rajasthan) (2022 (3) TMI 58 - CESTAT New Delhi); (5) Flexi Caps and Polymers Pvt. Ltd. vs. Commissioner, CGST & Central Excise-Indore 19 E/53685/2023 (2021 (9) TMI 917 - CESTAT New Delhi); and (6) M/s. Circor Flow Technologies India Private Ltd. vs. Principal Commissioner of GST & Central Excise, Coimbatore (2022 (59) G.S.T.L. 63 (Tri. - Chennai).
66. The inevitable conclusion, therefore, that follows from the aforesaid discussion is that Shakti Pumps is entitled to cash refund of CENVAT credit on the amount of CVD and SAD paid even after 01.07.2017. The Commissioner (Appeals), therefore, committed no illegality in granting this relief to Shakti Pumps.
(emphasis supplied)
32. It is clear from the aforesaid decision of the Tribunal in Shakti Pumps that Shakti Pumps was held entitled to claim refund of CENVAT credit in cash under the provision of section 142(3) of the CGST Act even though Shakti Pumps had paid CVD and SAD post implementation of the CGST Act and in terms of the 2004 Credit Rules, as applicable prior to 01.07.2017, Shakti Pumps was entitled to claim CENVAT credit of CVD and SAD paid on imports. The appellant would, therefore, be entitled to refund in cash CENVAT credit of the amount of CVD and SAD paid after 01.07.2017.
33. Learned authorized representative appearing for the department has placed reliance upon a judgment of the Jharkhand High Court in Rungta Mines. The relevant paragraphs of the judgment of the Jharkhand High Court are reproduced below:
"41. Thus, Section 142(3) of CGST Act clearly provides that refund application with respect of any amount relating to Cenvat credit, duty, tax, interest or any other amount paid under the existing law is to be disposed of in accordance with the provisions of existing law and if any such amount accrues the same shall be paid in cash.20
E/53685/2023 Such right to refund in cash has been conferred 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.
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45. The provision of Section 142(3) does not entitle a person to seek refund who has no such right under the existing law or where the right under the existing law has extinguished or where right under the new CGST regime with respect to such claim has not been exercised in terms of the provision of CGST Act and the rules framed and notifications issued. Meaning thereby, Section 142(3) does not confer a new right which never existed under the old regime except to the manner of giving relief by refund in cash if the person is found entitled under the existing law in terms of the existing law. Section 142(3) does not create any new right on any person but it saves the existing right which existed on the appointed day and provides the modalities for refund in cash if found entitled under the existing law as the entire claim is mandated to be dealt with as per the existing law. It neither revive any right which stood extinguished in terms of the existing law nor does it create a new right by virtue of coming into force of CGST Act.
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49. In the peculiar facts of this case, the petitioner did not claim transitional credit but claimed the impugned amount of service tax on "port services" as credit in their ST-3 return which they were admittedly not entitled as they were assessee under service tax only on reverse charge mechanism and admittedly the "port services" availed by the petitioner was not covered under reverse charge mechanism. Thus, the petitioner on the one hand illegally took credit of service tax on "port services" as credit in their ST-3 return and on the other hand filed application for refund of the same amount under 21 E/53685/2023 Section 142(3) of the CGST Act which is certainly not permissible in law. The authorities have rightly considered these aspects of the matter also while rejecting the application for refund filed by the petitioner."
(emphasis supplied)
34. It would be seen that the Jharkhand High Court after acknowledging that under section 142(3) of the CGST Act a refund application can be filed with respect to any amount relating to CENVAT credit paid under the existing law and it has to be disposed of in accordance with the provisions of the existing law, the refund was not granted for the reason that the writ petitioner had not claimed transactional credit, but had claimed the amount of service tax on 'port service' as credit in the ST-3 returns to which it was admittedly not entitled to as it was an assessee under service tax only on reverse charge mechanism and admittedly the "port services" availed by the writ petitioner was not covered under reverse charge mechanism. Thus, it was found as a fact that the writ petitioner had not only illegally taken credit of service tax on "port services" as credit in the ST-3 returns, but had filed an application for refund of the same under section 142(3) of the CGST Act, which was not permissible in law. This decision of the Jharkhand High Court in Rungta Mines would, therefore, not come to the aid of the department.
35. Learned authorized representative appearing for the department has also relied upon the two decisions, each rendered by a learned Member of the Tribunal, in United Seamless Tubular and M/s. JSW Steel Ltd. vs. Commissioner of Central Tax & Central Excise 12. Both these decisions run contrary to the decision of a Larger Bench of
12. Excise Appeal No. 20135 of 2021 decided on 31.05.2024 22 E/53685/2023 the Tribunal in M/s. Bosch Electrical Drive India Private Limited vs. Commissioner of Central Tax, Chennai 13 and the decision a Division Bench of the Tribunal in Shakti Pumps.
36. The decision of the Chennai Bench of the Tribunal in L & T South City Projects is not applicable to the facts of the present case as would be clear from the following portion of the decision:
"5.1 xxxxxxxxxx. The contention in the present appeal is only with regard to interest of Rs. 1,19,04,818/- and the equal penalty imposed. From the arguments advanced by the Ld. Counsel, it is his case that when there was sufficient balance in the Cenvat account for payment of service tax, the appellant cannot be burdened with payment of interest. Undoubtedly, though there was sufficient balance in the Cenvat account, the adjustment of the same by causing a debit entry in the Cenvat account has been made by the appellant only on 21-3-2012 when the department was informed about such adjustment from the Cenvat account. The demand therefore stands discharged fully only on 21-3-2012. Merely because the amount was lying in the Cenvat account, it cannot be said that the demand has been paid or discharged."
(emphasis supplied)
37. The decision of the Larger Bench of the Tribunal in Collector of Central Excise, Chandigarh vs. Kashmir Conductors 14 relied upon by the learned authorized representative appearing for the department is also not applicable to the facts of the present case since it deals with time limit for filing refund claim. In the instant case, the refund claim has not been rejected as being barred by time under section 11B of the Central Excise Act, 1944.
13. (2023 (12) TMI 1145 - CESTAT Chennai)
14. 1997 (96) E.L.T. 257 (Tri.- LB) 23 E/53685/2023
38. The inevitable conclusion, therefore, that follows from the aforesaid discussion is that the appellant would be entitled to refund of CENVAT credit in cash under the provisions of section 142(3) of the CGST Act of the amount of CVD and SAD paid after the coming into force of the CGST Act on 01.07.2017.
39. The impugned order dated 25.01.2023 passed by the Commissioner (Appeals), therefore, deserves to set aside and is set aside. The appeal is, accordingly, allowed.
(Order pronounced on 13.05.2025) (JUSTICE DILIP GUPTA) PRESIDENT (P. V. SUBBA RAO) MEMBER (TECHNICAL) Jyoti