Refund to be granted in cash towards accumulated CENVAT credit on exports during Pre-GST regime

By:

The CESTAT, Mumbai in the matter of M/s Oil States Industries India Pvt. Ltd v. Commissioner of CGST & Central Excise, Raigad [FINAL ORDER NO. A/85680 / 2022 dated August 5, 2022] has held that the assessee is entitled to get cash refund, if any, against CENVAT Credit available during Pre-GST regime as per provision contained in Section 142(3) of the Central Goods and Services Tax Act 2017 (“the CGST Act”).

Facts:

M/s Oil States Industries India Pvt. Ltd (“the Appellant) had exported its manufactured articles and had accumulated CENVAT credit against exports made during the period October, 2013 and December, 2013 and filed an refund claim application for refund of accumulated CENVAT Credit under Rule 5 of the CENVAT Credit Rules, 2004 but that was rejected as time barred by the Original Authority without any notice being sent to the Appellant.

The Appellant preferred an appeal before the Commissioner of Central Excise (Appeals) (“the Respondent”) that vide Order-in-Appeal (“the Impugned Order”) dated February 16, 2016 rejected the appeal. Then, it went on appeal before a wrong forum namely Revisionary Authority, Government of India who dismissed the appeal for want of jurisdiction. Hence the present appeal that is admitted after condonation of delay of the period. The Appellant has not challenged the legality of the rejection of its refund application but only sought for re-credit of the debited CENVAT Credits after final confirmation of rejection the refund sought against accumulated CENVAT Credits on exports.

Appellant’s contention:

The amount is to be re-credited to the Appellant’s input tax credit account and paid to it in cash as contemplated in Section 142 of the CGST Act.

Issue:

  • Whether the Appellant is eligible for the re-credit of the debited CENVAT Credits after final confirmation by the Respondent for rejection of the refund sought against accumulated CENVAT Credits on exports?

Held:

The CESTAT, Mumbai in [FINAL ORDER NO. A/85680 / 2022 dated August 5,2022] has held as under:

  • The claimant is entitled to take back the credit of the difference between the amount claimed and amount sanctioned. The amount sanctioned being zero, the entire credit could have been taken back by the Appellant but such an action can only be initiated upon completion of the entire adjudication and appeal process or by way of its abandonment or else in the event of taking a re-credit, if Appellant Authority allows the refund, it would amount to acceptance of dual benefits in taking advantage of improper wordings in the notification that remained silent as to at what stage the claimant can re-credit the amount back to its account.
  • Noted that, such a long waiting by the Appellant in not venturing into such an unethical practice exhibits the bonafideness of a law abiding national.
  • Stated that, the Appellant is entitled to get cash refund of INR 35,52,543/- with applicable interest, if any, against CENVAT Credit available to its credit during Pre-GST regime as per provision contained in Section 142(3) of the CGST Act.
  • Held that, the appeal is allowed and the Impugned order passed by the Respondent is hereby modified to the extent that Appellant is eligible to get cash refund of INR 35,52,543/- with applicable interest, if any, against unutilised CENVAT Credit and accordingly the Respondent is directed to pay the same within two months of receipt of this order.

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