The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no direction to treat period of interest starting after 3 months from date of filing refund, denial of interest on refund of cenvat credit not legal.
M/s.Shakti Pumps (India) Ltd, the Appellant is engaged in the manufacture of submersible pumps, power driven pumps, centrifugal pumps and solar pumping systems falling under Chapter heading 8413 of the Central Excise Tariff Act, 1985 (CETA). The Appellant is, presently, registered as GST tax payer. Prior to the implementation of GST,the Appellant was registered with Excise department and were availing Cenvat credit on inputs, input services and capital goods in accordance with the provisions of the Cenvat Credit Rules, 2004.
The Appellant was engaged both in domestic supplies as well as exports. For undertaking export supplies, appellant imported raw material and components, i.e., Solar Pump Drive, Stainless Steel Sheets, Coils etc., without payment of customs duty.
On account of shortfall in fulfillment of export obligations within the time period specified in Advance Authorization, the Appellant suo- motu discharged the appropriate Countervailing Duty (“CVD”) and Special Additional Duty (“SAD”) amounting to Rs. 1,33,86,856[Rs. 74,94,647 (CVD) + Rs. 58,92,209 (SAD)] on the duty free imported inputs, to regularize the imports.
Additionally, the Appellant paid the differential customs duty including CVD (Rs. 81,04,635) and SAD (Rs. 29,40,186) amounting to Rs. 1,10,44,821 vide challans dated from 27.3.18 to 3.7.18 by considering the rate of duty applicable. The duties (shortfall) were paid on the imported items, during the GST regime.
The Cenvat credit of the amount of CVD and SAD paid by appellant, post implementation of GST, could not be availed, even though ‘duty paid on imported inputs’ were used in the manufacture of final dutiable goods. Further, such amounts could neither be carried forward as transitional credit, at the time of migrating to GST.
The Appellant filed 2 applications both dated 9.5.2019 claiming refunds amounting to Rs. 1,33,86,856 and Rs. 1,10,44,821 in respect of the amount of SAD and CVD paid by appellant, post implementation of GST, in terms of Section 142(3) read with Section 142 (6)(a) of the CGST Act before the Joint Commissioner of State Tax, GST, Indore. Due to revamping of the GST jurisdiction, the appellant was advised to be not the appropriate authority. The Claim papers were re-submitted by Appellant on 8.7.2019 before the concerned Assistant Commissioner, CGST, Central Excise requesting for refund of Rs. 1,33,86,856 and Rs. 1,10,44,821, in cash.
The refund was initially rejected by the Adjudicating Authority and the refund was held allowable by the Commissioner (Appeals), subject to verification of unjust enrichment. Thereafter, the refund was sanctioned and the claim of interest was denied observing that as certain documents, which were required, were filed by the appellant/assesssee on 7.12.2020, it was held that refund has been granted within a period of 3 months, and hence, no interest was payable.
On appeal, the Commissioner (Appeals) observed that when initially the refund claim was filed in May, 2019, no requisition was raised by the Revenue for additional documents and hence, the claim of interest is tenable relying on the ruling of the Supreme Court in the case of Dunlop India Ltd. & Madras Rubber Factory Vs. Union of India. It was held that the appellant is entitled to interest and the Adjudicating Authority was directed to pay interest in terms of Section 11 BB of the Act.
A single member bench comprising Shri Anil Choudhary, Member (Judicial) that since there is clear direction by the Commissioner (Appeals) to pay interest and there was further direction to treat the period of interest starting after three months from the date of filing of refund claim i.e. 9.5.2019, the denial of interest subsequently by the Adjudicating Authority is highly illegal a
While allowing the appeal, the impugned order is set aside and the Adjudicating Authority is directed to grant the interest starting from 9th August, 2019 till the date of disbursement i.e. 30th December, 2020.
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