CESTAT allows cash refund of CENVAT credit along with interest not transitioned into GST

The Appellant had imported certain inputs upon which the Appellant paid Custom Duty including CVD and SAD at the time of clearance of such inputs. However, the said payment of CVD and SAD was not reflected in the ER-1 returns as the due date for filing the return was already over before the said goods reached the Factory.

Due to change in the law, the Appellant was put beyond any recourse to avail the credit, hence the Appellant had sought relief through filing of refund application u/s. 11B of the Excise Act, r/w. Section 142 of the CGST Act. The refund application came to be rejected and such rejection was also upheld by the Appellate Authority.

Aggrieved, the Appellant preferred an Appeal before the Tribunal. It was submitted by the Appellant that as a settled principle of law, where utilisation of CENVAT Credit becomes impermissible, cash refund u/s. 11B of the Central Excise Act is available. The Appellant further placed reliance on Article 265 of the Constitution of India arguing that no tax can be collected without authority of law, it is incumbent upon the Respondent-Department to justify its retention with itself when there is a bonafide claim for re-payment/re-credit to the assessee.

The Tribunal observed that the eligibility to take credit of the duties paid as CENVAT credit is undisputable. Merely because of the procedural infraction occurred during transition to GST period, the Appellant could not take the credits in GST regime and hence it sought for refund for which contingent provision is well enumerated in Section 142(6) of the CGST Act that deals with claim for CENVAT Credit after the appointed date under the existing law. The CESTAT also took cognisance of the judgement of the Apex Court in RE: FILCO Trade Centre Private Limited [2022-VIL-63-SC] and held that the Appellant is otherwise also eligible to claim the transitional credit by revising their Form TRAN-1 in the window re-opened.

In view of the above observations, the CESTAT allowed the appeal and directed the Department to grant the cash refund of unutilised CENVAT credit along with applicable interest within 2 months from the date of communication of order, provided, that the same is not claimed as transitional credit in the window for filing / revising TRAN-1 form.

Clariant Chemicals India Limited [Excise Appeal No. 87606/2019 dated 18 October 2022]

GLS Comments:

We are pleased to inform you that this matter was argued by our Managing Partner, Mr. Ganesh Kumar. During the course of the arguments before the Mumbai CESTAT, we had relied upon the judgement of the New Delhi CESTAT in RE: Flexi Caps and Polymers Private Limited [2022 (58) G.S.T.L. 545 (Tri. - Del.)], wherein cash of refund of CENVAT credit of duties paid post GST, had been allowed u/s. 11B of the Excise Act. The instant judgement will help a number of assessees who could not avail their CENVAT credit in Form TRAN-1 and have not availed the benefit of re-opening of the window for filing / revision of TRAN-1, for any reasons. 

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