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TMI Blog2022 (3) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... t availed CENVAT credit under the provisions of the CENVAT Credit Rules 2004 [the Credit Rules] on cess paid on procurement of goods and services. However, the notification dated 01.03.2015 exempted levy of the cess on all goods falling in the First Schedule to the Central Excise Tariff Act, 1985 [the Tariff Act]. Thus, w.e.f. 01.03.2015 only central excise duty was leviable and levy of cess was exempted. The closing balance of the cess as on 28.02.2015 could not consequently be utilised by the appellant post 01.03.2015 and it was carried forward in the central excise returns. This was for the reason that credit of cess could be utilised for payment of the cess under the Credit Rules and could not have been utilised for payment of excise duty. On introduction of the Central Goods and Service Tax, 2017 Act [GST Act] w.e.f. 01.07.2017, the closing balance of the credit on cess appearing in the excise returns filed by the appellant in the month of June 2017 was not carried forward and instead the appellant filed a claim for refund of such balance of Rs. 53,47,491/- of credit on cess on 29.05.2018. 3. A show cause notice dated 16.07.2018 was, however, issued to the appellant stating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Commissioner, by order dated 12.11.2018, rejected the refund claim and the relevant portion of the order is reproduced below: "8. I have carefully gone through the refund application and the documents on record and defence submission of the claimant and find that: (i) The refund claim originally is not submitted in proper format and also found incomplete under the provisions of Section of Section 11B of the Central Excise Act, 1944 as not accompanied by such documentary evidence to establish that amount of refund claimed was actually paid by them and not provided information in regard to period involved. (ii) The Education Cess Secondary Higher Education Cess has been withdrawn w.e.f. 01.03.2015 vide Notification No. 14/2015-CE and 15/2015-CE both dated 01.03.2015. (iii) As these Cesses have been phased out vide above Notifications and no new liability to pay such Cesses arises, no vested right exists of claimant in relation to the accumulated credit of the part. (iv) Further in the minutes of Tariff Conference held on 28th and 29th October‟15 issued under F. No. 96/85/2015-CX.I dtd. 07.12.2015 by CBEC, New Delhi at point B21 clarified as under:- "It was Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is well within the time limit of one year and the same cannot be considered as time barred. 10. I observed that in the instant case the balance credit of Education Cess and S.H.Edu. Cess as on 30.06.2017 with the appellant being ineligible cess credit the appellant could not have transferred such credit in their electronic credit ledger thorough TRAN-1. The impugned Cesses had been phased out w.e.f. 01.03.2015 vide Notification No. 14/2015-CE & No. 15/2015-CE both dated 01.03.2015. 11. In this regard, I find that the issue has already been discussed in the Tariff Conference held on 28th & 29th October 2015 in which it has been decided that accumulated credit of education cess and secondary & higher education cess, which had been phased out, could not be utilized any further. As far as the claim of refund of unutilized credit of impugned cesses is concerned, I find that the matter has already been decided by Hon'ble High Court of Rajasthan in the case of M/s. Banswara Syntex Ltd. Versus CCE, Udaipur." (emphasis supplied) 7. Shri Sparsh Bhargava learned counsel for the appellant made the following the submissions: (i) Refund of the credit could not have been denied to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee cannot claim cash refund or encashment of unutilized and unavailed amount of credit. In support of this connection reliance has been placed on the decision of a learned Member of the Tribunal in Bharat Electricals Ltd. vs. Commissioner of C.T., Secunderabad-ST [2020 (41) G.S.T.L 465 (Tri-Hyd)] (ii) Since cess was not payable after the cut-off date, disallowing credit thereafter is justified. In support of this contention, reliance has been placed on the judgment of the Delhi High Court in Cellular Operators Association of India vs. Union of India [2018 (14) G.S.T.L. 522 (Del.)]; (iii) Clarification issued by Circular dated 07.12.2015 also disentitles the appellant from claiming refund; and (iv) The balance credit of cess with the appellant as on 30.06.2017, being ineligible cess credit, the appellant could not have transferred such credit in electronic credit ledger thorough TRAN-1. 9. The submissions advanced by learned counsel for the appellant and the learned authorised representative appearing for the Department have been considered. 10. It is not in dispute that prior to 01.03.2015 cess was leviable on manufactured goods, in addition to excise duty and the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2006 in the High Court of Karnataka at Bangalore. The High Court by its impugned order has affirmed the order of the tribunal and dismissed C.E.A. No. 5/2006 filed by the revenue. Learned ASG appearing for the Union of India fairly concedes that those decisions of the Tribunal, which were relied upon by the Tribunal, have not been appealed against. In view of the concession made by the learned ASG, this special leave petition is dismissed." 15. It is, therefore, clear from the aforesaid decision rendered in Slovak India Trading by the Tribunal, the Karnataka High Court and the Supreme Court that refund has to be granted when either the there is a closure of the factory or when an assessee goes out of the Modvat scheme. 16. In Bharat Heavy Electricals, a Division Bench of the Tribunal examined whether credits create a vested right and do not extinguish with the change of law and held that change of law cannot be a ground for divesting an assessee from this valuable right and in this connection, the Tribunal placed reliance upon the decision of the Karnataka High Court in Slovak India Trading. The observations of the Tribunal are as follows: "4. We have carefully gone throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 1944 [the Excise Act] and held, in view of the aforesaid Division Bench decision of the Tribunal in Bharat Heavy Electricals, as also the decisions of the Supreme Court and the Karnataka High Court in Slovak India Trading that an assessee is entitled to refund of unutilised credit of cess after the introduction of GST. The relevant observations of the Tribunal are as follows: "6. After considering the submissions of both the parties and perusal of the material on record as well as various judgments relied upon by both the parties cited supra, I find that in the present case the appellant has filed the refund claim of accumulated balance of unutilized credit of Education Cess and Secondary and Higher Education Cess available in their books under Section 11B of the Central Excise Act within a period of one year i.e. on 29/06/2018 from the introduction of GST law. I also find that with the introduction of GST there is a restriction for these cesses to be transitioned into GST by virtue of Section 140(1) of the Act and therefore the appellant did not transfer the said credit of cesses into GST and preferred to file the refund claim under Section 11B of the Central Excise Act. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een relied upon by the Division Bench of the Delhi Tribunal in the case of Bharat Heavy Electricals Ltd. has categorically held that refund can be granted of the cesses viz. Education Cess and Higher Education Cess which could not be transitioned into GST. As far as time-bar aspect is concerned, the findings in the impugned order regarding time-bar is beyond the show-cause notice as well as Order-inOriginal and the same is not sustainable in law. Hence, by following the ratios of the Division Bench of Delhi Tribunal in Bharat Heavy Electricals Ltd. and jurisdictional High Court in Slovak India Trading Co. Pvt. Ltd., I allow the appeal of the appellant." (emphasis supplied) 19. In Nichiplast India, a learned Member of the Tribunal observed as follows: "12. Having considered the rival contentions, following the rulings of Karnataka High Court as confirmed by the Hon‟ble Supreme Court, I hold that the appellant is entitled to refund of the amount of Cenvat Credit lying in their Cenvat Credit account on closure of business. I further direct that the appellant is entitled to interest as per Rules, as per section 11BB of Central Excise Act, i.e. three months after the date of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the proviso to section 11B(2) of the Central Excise Act, 1944 where an assessee is unable to utilize credit on inputs? (b) Whether by exercising power under Section 11B of the said Act of 1944, a refund of un-utilised amount of Cenvat Credit on account of the closure of manufacturing activities can be granted? (c) Whether what is observed in the order dated 25th January 2007 passed by the Apex Court in Petition for Special Leave to Appeal (Civil) No. CC 467 of 2007 (Union of India vs Slovak India Trading Company Pvt Ltd.) can be read as a declaration of law under Article 141 of the Constitution of India?" and they were answered as follows: "40. As a result of the above discussion, we answer the questions of law framed above as (a) and (b) in the negative. They have to be answered against the assessee and in favour of the Revenue. Questions (a) and (b) having been answered accordingly, needless to state that the order of the Hon‟ble Supreme Court in the case of Slovak India (supra) cannot be read as a declaration of law under Article 141 of the Constitution of India." 5. Per contra, learned counsel for the appellant relies on the judgment of the Hon‟ble High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling credit of such tax, in accordance with the existing conditions and provisions prevailing on that date. 24. In other words, Cenvat credit lying in an assessee‟s account creates an infallible and indefeasible right, which in the present case is indispensable and undeniable; however, to the extent of making payment of the corresponding cess, if any, payable on or after that date, as categorically stipulated in 1st and 2nd proviso to Rule 3(7)(b) of the Cenvat Credit Rules, 2004. 25. Since the Cenvat Credit Rules, the repository of rights of an assessee to avail credit of the duty or other sums paid on inputs does not entail or even envisage refund of such credit in cash and encashment cannot be claimed as a matter of course. It can also not be asserted that an assessee is entitled to or has an ingrained or vested right to claim refund of Education Cess and Secondary and Higher Secondary Education Cess or any other duty paid in accordance with the law dehors the Cenvat Credit Rules, 2004. Provisions as enacted in the form of Section 11B of the Act of 1944 or other provisions are of little avail to the assessee, as they do not even provide for availment of credit of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plea of the appellant is not for adjustment of the credit on cess amount against payment of excise duty or service tax, but it is for refund of credit accumulated on account of payment of tax on cess. This decision would, therefore, not help the respondent. 27. Learned authorised representative also place reliance upon the notification dated 07.12.2015 issued by CBEC to contend that a policy decision had been taken not to allow utilisation of accumulated credit of cess, after cess had been phased out and it is reproduced below: "Discussion & Decision The conference after discussion and briefing from the officers from the Board noted that it was Government conscious policy "decision to withdraw the Education Cess and Secondary and Higher Education Cess. It is a policy decision to not allow utilization of accumulated credit of education cess and secondary and higher education cess after these Cesses have been phased out. As these Cesses have been phased out and no new liability to pay such Cess arises, no vested right can be said to exist in relation to the accumulated credit of the past. The rule and notifications as they exist need to be followed and do not need any amendm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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