The Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad held that Cenvat Credit refund can’t be rejected merely for Service Tax on pursuance by audit.
The tribunal found that the lower authorities have rejected the claim on the ground that the refund of Cenvat is not appearing under Clause (a) to (f) of Section 11 B (2).
In this regard, the bench was of the view that since, the refund was otherwise not admissible in cash in respect of Cenvat credit but by virtue of Section 142 (3), the assessee is eligible for refund. Therefore, Clause (a) to (f) are not relevant for the purpose of refund of Cenvat credit in terms of Section 142 (3). Accordingly, on this ground the refund was wrongly rejected.
The tribunal stated that from the reading of the Section 142(8)(a) of CGST Act, 2017, it is clear that it provides that any amount of tax which was recoverable under the existing law before 01.07.2017 and the same is recovered, the amount recovered shall not be admissible as input tax credit under this Act. There is no ambiguity in the provision that any amount of tax paid under the existing law as was done in the present case no input tax credit is admissible.
The bench found that neither any show cause notice for recovery of the service tax invoking any extended period was issued nor adjudication of such proceeding was done. Therefore, in not paying the service tax, no mala fide intention or suppression of fact is involved.
“Merely because the appellant have paid the service tax on pursuance by the audit will not be a reason for denying the refund under Section 142”, the bench observed.
Facts
The issue involved in the case is whether both the authorities below are right in rejecting the refund claim of Cenvat Credit of CVD and SAD paid by the appellant in terms of Section 142(3) of CGST Act, 2017. Both the authorities have rejected refund claim on the ground that the refund is not admissible as the same is not covered by Clause (a) to (f) of subsection (2) Section 11 B of Central Excise Act, 1944 and as per Section 142 (8)(a) of CGST Act, 2017, the refund is not admissible.
Vinay Kansara, Counsel appearing on behalf of the appellant submitted that the reason for rejection of the refund claim have been addressed in various judgments and it was held that even though the service tax was paid under reverse charge mechanism after 01.04.2017, but for the period prior to 01.07.2017, the refund of such duty paid being a Cenvat credit is admissible.
Both the lower authorities have also contended that since CVD and SAD are not covered under the clauses (a) to (f) of Section 11 B (2) of Central Excise Act, 1944, the appellant’s claim is not valid. In this regard he submitted that Section 142 (3) clearly provides for cash refund of Cenvat credit, therefore, the interpretation of the lower authorities with regard to Section 11 B (2) clause (a) to (f) is incorrect.
Conclusion
The tribunal said that except the grounds for rejection no other issues have been dealt by the sanctioning authority such as admissibility of the input service for Cenvat credit, unjust enrichment and relevant documents verification. Accordingly, the matter deserves to be remanded to the adjudicating authority only for the limited purpose.
Case Details
Case Name: FILATEX INDIA LTD v/s Commissioner of C.E. & S.T.-VADODARA)
Citation: Excise Appeal No. 10372 of 2020 – SM
Counsel for Petitioner : Shri Vinay Kansara, Advocate
Counsel for Respondent : Shri Prashant Tripathi, Superintendent (AR)
Court: CESTAT, Ahmedabad
Judge: Ramesh Nair Member (Judicial)
Decision Date: 07/08/2024
