Cenvat Credit Rules, 2004 And Central Excise Act, 1944 Lack Provision To Allow Cash Refund Of Cess Lying In Cenvat Credit Balance: CESTAT
Mariya Paliwala
4 May 2024 8:45 AM GMT
The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Cenvat Credit Rules, 2004 and Central Excise Act, 1944 lacks provision to allow cash refund of cesses lying in cenvat credit balance.The bench of Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that there is no error when Commissioner (Appeals) has held that there is...
The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Cenvat Credit Rules, 2004 and Central Excise Act, 1944 lacks provision to allow cash refund of cesses lying in cenvat credit balance.
The bench of Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that there is no error when Commissioner (Appeals) has held that there is no provision in the Cenvat Credit Rules, 2004 or in Central Excise Act, 1944 to allow cash refund of cesses lying in the balance in Cenvat credit. Once it is not allowable, a question to refund the same does not arise mere transitioning it to TRAN-1 shall not create any light to what was not allowable.
The appellant/assessee has filed the refund claim of Cenvat credit availed on Education Cess and Higher Secondary Education Cess carried forward as on the appointed day i.e. 30.06.2017 in terms of Section 142(3) of the CGST Act 2017. The Cenvat credit so claimed for refund was availed on capital goods and input services during the period November 2012 to June 2017. The relevant date in terms of Section 11B (5)(B)(f) is the day of payment of duty. The department formed an opinion that in terms of Section 142(3) of the CGST Act, 2017, it has particularly been provided that, no refund shall be allowed of any amount of Cenvat credit where the balance of the amount as on the appointed day i.e. 30.06.2017 has been carried forward under this Act.
The entire amount of refund claim has been carried forward on the appointed day by the appellant as per the ER-1 filed and Tran-1 filed. Hence vide Show Cause Notice the entire refund claim of Rs. 7,97,27,333/- is proposed to be rejected in terms of provisions of Section 11B of Central Excise Act, 1944 read with 142(3) of the Central GST Act 2017. The proposal has been confirmed. The appeal was rejected by the Commissioner (Appeals).
The assessee contended that order has been passed in violation of principles of natural justice are all intimations for personal hearing were belated being received after the date of hearing. Hence the ex-parte order is prayed to be set aside. The order is also alleged to have been passed without considering the submissions of the appellants. Section 142(3) of CGST Act, 2017 has not been judiciously considered which is squarely applicable to the appellant's case Appellant prepares to subsume the Education Cess and Secondary & Higher Education Cess in Central Excise Duty. Thus the order under challenge has wrongly denied eligibility of appellant for the refund. Section 11B of Central Excise Act, 1944 is wrongly invoked. The Order is liable to be set aside on the ground that the time limit has not been computed from the date of the amendment in Section 140(1) of CGST Act.
The department contended that the appellant has availed the credit in the ER-1 for the month of June 2017 on 08.07.2017 and the credit has been carried forward in the GST Tran-1 as prescribed under Section 140(1) of CGST Act. Subsequently, CGST (Amendment) Act, effective from 1 February 2019 has denied the credit of Education Cess and Secondary and Higher Education Cess for transition to OST by amending Section 140(1)(a) of CGST Act. The appellant reversed the credit under protest and also intimated the department.
The issue raised was whether the cash refund of Cenvat credit of Cess in the form of Education Cess (EC) and Secondary Higher Education Cess (SHEC) is permissible to be refunded as the assessee was unable to utilize the said credit.
The tribunal while dismissing the appeal noted that even under transitional provisions of CGST Act, 2017 Section 140 thereof, precisely Section 142(3), it has particularly been provided that, no refund shall be allowed of any amount of Cenvat credit where the balance of the amount as on the appointed day i.e. 01.07.2017 has been carried forward.
Counsel For Appellant: Vikash Agarwal
Counsel For Respondent: Rakesh Agarwal
Case Title: M/s. NMDC Limited Versus Commissioner of C.G.ST.
Case No.: Excise Appeal No. 50793 of 2021
