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TMI Blog2025 (2) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... . The appellants were registered under Service Tax authorities holding centralized Registration No. AAAC16386ASD002; and upon transition into GST regime are holding GSTN No. 27AAACN1335Q1Z8 with State Government of Maharashtra. The appellants avail CENVAT credit of duty/tax on inputs and input services used in provision of output services. The appellants have filed a refund application in the prescribed Form-R dated 28.06.2018for refund of Rs.25,52,385/- being the closing balance of Education Cess and Secondary & Higher education cess lying as on 30.06.2017, which could not be transitioned as input credit under GST regime, on various grounds mentioned in their refund application. The said amount was initially carried forward by the appellants as transition credit under GST regime by filing TRAN-1 and also reflected in the ST-3 return filed for the period April, 2017September,2017 on 14.08.2017. Subsequently, on being made aware through the CGST (Amendment) Act, 2018 and Circular dated 02.01.2019 that the same is not permissible in GST regime, had reversed the credit of Rs.25,52,385/- by submitting revised TRAN-1 and filing revised ST-3 return on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndary Higher Education Cess as on 30th June, 2017, amounting to Rs.25,52,385/-and the same could not effectively be carried forward to GST regime, under transitional provisions, due to the objection raised by the department. Since the closing balance of Education Cess and SHE Cess could not be utilized and also not permitted to be transitioned to GST, the appellants had requested for refund of the same. However, there refund application was rejected by the authorities below. 3.2 Learned Advocate stated that the appellants had transitioned credit under Section 140(1) of the CGST Act, 2017; Explanations for 'Eligible Duties and Taxes' provided in Section 140 of the CGST Act 2017 which does not include credit of cess was made applicable for sub sections (3), (4), (5) and (6) of Section 140 of the CGST Act 2017. In the said explanations, it is specifically mentioned that these explanations are applicable for abovementioned sub-sections only. Therefore, explanations for 'Eligible Duties and Taxes' provided in Section 140 of the CGST Act 2017 does not apply to carry forward of CENVAT credit under Section 140(1) of the CGST Act 2017.Thus, in terms of Section 140(1), the appellants are al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less specific provision which would debar from refund. 3.5 Further, learned Advocate also relied on the decision of the Tribunal in the case of Bharat Heavy Electricals Ltd (2020-TIOL- 1341-CESTAT-DEL) wherein it was held that Education Cess and Secondary & Higher Education Cess cannot be transferred to GST account and as they were lying unutilized in their CENVAT credit account on 30.06.2017, the appellant in that case was held to be entitled to claim the refund thereof. He also cited the order of the Tribunal in the case of Emami Cement Ltd (2022-TIOL-280- CESTATDEL) wherein it was held that CENVAT credit is a vested right as held by the Hon'ble Supreme Court in Eicher Motors Ltd. Vs. CCE 2002TIOL-149- SC-CX-LB and the decision in Samtel India Ltd. (2003TIOL-40-SC-CX) and hence the appellant in that case was held to be eligible for refund of the balance amount of credit of Cess lying in CENVAT account. He had also relied upon the Final Order No.70111/2-22 dated 29.04.2022 of the Co-ordinate Bench of the Tribunal in the case of Dy. General Manager, BHEL Vs. Commissioner, CGST & CX, Kanpur. With the above submissions and those made in the grounds of appeal, learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xxx xxx xxx (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. xxx xxx xxx xxx (9) (a) Where any return, furnished under the existing law, is revised after the appointed day and if, pursuant to such revision, any amount is found to be recoverable or any amount of CENVAT credit is found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en passed on by him to any other person : Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of sub-section (2) as substituted by that Act : Provided further that the limitation of one year shall not apply where any duty and interest, if any, paid on such duty has been paid under protest. Explanation.- Omitted by the Finance (No. 2) Act, 1980. (2) If, on receipt of any such application, the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise is satisfied that the whole or any part of the duty of excise and interest, if any, paid on such duty paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund: Provided that the amount of duty of excise and interest, if any, paid on such duty as determined by the Assistant Commissioner of Central Excise or Deputy Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 subsection (3) of section 142 of the CGST Act and against this order an appeal will lie to the Tribunal. 50. The reference is, accordingly, answered in the following manner: An appeal would lie to the Customs, Excise & Service Tax Appellate Tribunal against an order passed under section 142 of the Central Goods and Services Tax Act, 2017." Thus, it could be seen that Larger Bench of the Tribunal has held that this Tribunal is the appropriate appellate forum for preferring an appeal against an order passed under Section 142 of the CGST Act, 2017. 6. From the facts of the case, it is seen that the appellants had duly followed the procedure and conditions prescribed in complying with the obligations under CENVAT Credit Rules, 2004, in taking credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal products. I also find that the proviso (c) to Section 11B(2) ibid, cannot be read to state that refund of such excess CENVAT credit has not been provided under Rule 5 of the CCR, as the entire arrangement of refund of excess CENVAT credit is arising as a transitional arrangement by moving from Excise duty/Service Tax regime to GST regime. The stand taken by the Commissioner (Appeals) is also illogical, as when the Central Excise Act, 1944 amongst other laws relating to old tax regime was repealed by Section 174 of the CGST Act, 2017 and that the CCR is also being superseded vide Notification No.20/2017-C.E. (N.T.) dated 30.06.2017, by the Central Government for smooth implementation of transfer to GST regime in indirect taxation, it is not feasible to make a specific provision in CENVAT statute, for enabling cash refund of excess CENVAT credit relating to earlier regime while moving to the new GST regime. 8.2 Further, I also find merit in the argument of the learned Advocate for the appellants that they are eligible for refund of duty in cash under Section 11B(2)(d) ibid, inasmuch as the phrase 'duty of excise' used in Section 11B(2)(d) ibid refers to duties of excise l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Central Excise duty, Service Tax, VAT, Purchase Tax, Central Sales Tax, Entry Tax, Local Body Taxes, Octroi, Luxury Tax, etc. 9.3 It is also expected that GST will also make India's exports more competitive and also provide a level playing field to domestic industry to compete with imports. In the past due to cascading nature of taxes, India's exports carried some embedded taxes, making them less competitive. Similarly, the hidden effect of cascading means that the total tax incidence on domestic industry is not transparent. Under GST regime, the tax incidence will be transparent, enabling full removal of tax burden on exports and full incidence of domestic taxes on imports. 9.4 In the new GST regime, when Goods and Services Tax (GST) was introduced as a unified tax system, in the country, it would be least expected that the legislation intended that input stage credit which was validly available through erstwhile laws of Central Excise Act, 1944 and Finance Act, 1994, and permitted to be used for discharge of output tax liability through detailed CENVAT Credit Rules, 2004, would have to be foregone by not allowing the manufacturers and service providers, with such validly ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or. We are here really concerned with credit that has been validly taken, and its benefit is available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefore, indefeasible. It should also be noted that there is no co-relation of the raw material and the final product; that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available. 18. It is, therefore, that in the case of Eicher Motors Ltd. v. Union of India [1999 (106) E.L.T. 3] this Court said that a credit under the Modvat scheme was "as good as tax paid." 9.6 Further, the procedural aspect of Modvat and its aim was explained by the Hon'ble Apex Court in the case of Ichalkaranji Machine Centre Private Limited Vs. Collector of Central Excise, Pune - CCE 2004 (174) E.L.T. 417 (S.C.) as follows: "9. Modvat is basically a duty-collecting procedure, which aims at allowing relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of M/s Clariant Chemicals India Limited Vs. Commissioner of Central Excise & Service Tax, Raigad are extracted and given below: "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 Section 142 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit is not eligible to the appellant. It is merely stated that tax has been paid voluntarily and therefore credit is not available under the GST regime. Though credit is not available as Input Tax Credit under GST law, the credit under the erstwhile Cenvat Credit Rules is eligible to the appellant. Such credit has to be processed under Section 142 (3) of GST Act, 2017 and refunded in cash to the assessee. 13. From the discussions made above, the principles laid down in the decisions cited above, I am of the view that rejection of refund claim cannot be justified. The impugned order is set aside. Appeal is allowed with consequential relief, if any." 10.3 In the case of Dhyan Networks and Technologies Pvt. Ltd. Vs. Commissioner of GST and Central Excise, Chennai - (2023) 4 Centax 304 (Tri.-Mad), the Tribunal has held that cash refund is required to be given to the assessees in terms of Section 142 of the CGST Act, 2017. The relevant paragraphs of the said order are extracted and given below: "8. Further I find that this Tribunal in the case of Wave Mechanics Pvt. Ltd. [2019 (370) E.L.T. 291 (Tribunal)] cited supra has held that cash refund is not admissible under Rule 5 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh refund as per sub-section (3) and sub-section (6)(a) of Section 142 of CGST Act. All the three appeals are accordingly allowed." 7. As the appellant has been allowed to take re-credit and is not able to do the same due to the introduction of G.S.T., I am of the view that he has to be given refund of the said amount in cash. From the discussions made above and also following the decision as cited above, I am of the view that the appellant is eligible for refund of the amount of Rs. 2,93,427/-." 10.4 I further find that the learned AR had argued that except in the case of export of goods, in no other case refund of credit is permissible under the Cenvat rules in cash or by cheque; and that refund amount is to be given in RG23A, Part II account, if the same is in operation. In this regard, I find that the Co-ordinate Bench of the Tribunal had taken a contrary stand in this regard in the case of Gauri Plasticulture P. Ltd. Vs. Commissioner of Central Excise, Indore which was subsequently appealed against by the Revenue before the Hon'ble Bombay High Court, wherein it was held that cash refund in terms of clause (c) to the proviso to Section 11B(2) of the Central Excise Act, 1944 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re them, in the case of Combitic Global Caplet Pvt. Ltd. Vs. Union of India in Writ Petition No.729 of 2021 with W.P. No.1228 of 2021, and being jurisdictionally binding on this Regional Bench of the Tribunal, I would like to be guided by such judgement delivered recently. In the judgement delivered on 10.06.2024, the Hon'ble Bombay High Court have held that Subsection (3) of Section 142 of the CGST Act very clearly states that any amount eventually accruing shall be paid in cash and directed the departmental authorities/sanctioning authority for refunding the amount of duty refundable to the petitioner in cash instead of credit in CENVAT account. The relevant paragraphs of the said judgement of the Hon'ble Bombay High Court are extracted and given below: "8. It is these orders which are impugned in this petition and the stand taken by petitioner is that Section 142(3) of the Central Goods And Services Tax Act 2017 (the Act) clearly says, w.e.f 1st July 2017, in view of the effect of change in the regime, i.e., when the GST regime was introduced, any refund that was payable to petitioner has to be paid in cash. Mr. Sridharan submitted that since the CENVAT regime has come t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he credit of refund is the only issue because Mr. Adik, as an officer of this court and in fairness, agreed that Government cannot retain any amount without any authority of law. 12. Sub-Section (3) of Section 142 of the Act very clearly says "any amount eventually accruing shall be paid in cash". In the circumstances, we are of the opinion that respondents ought to have directed the sanctioning authority to refund the amount of duty refundable to petitioner in cash instead of credit in CENVAT account, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of subsection (2) of section 11B of the Central Excise Act, 1944. 13. Therefore, Rule made absolute in terms of prayer clauses (a) and (b) of both petitions, which are quoted above. 14. The amount shall be paid together with accumulated interest in accordance with law within four weeks of this order being uploaded." 10.6 I am also aware that there have been few orders passed by the Co-ordinate Benches of the Tribunal on the above issue, which have taken contrary positions viz., the Chennai Bench of the Tribunal in the case of Dhyan Networ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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