Relief to Flexi Caps: CESTAT sanctions Refund of CVD and SAD paid u/s 142 of GST [Read Order]

In a Relief to Flexi Caps, the Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) sanctioned refund of Countervailing Duty (CVD) and Special Additional Duty (SAD) paid under Section 142 of GST.

The appellants, Flexi Caps & Polymers Private Limited has been engaged in manufacture of excisable goods. They were paying Central Excise Duty and were availing Cenvat Credit of duty / tax paid on inputs, capital goods and input services. Accordingly an application was filed by the appellant praying for sanction of refund of the Countervailing Duty (CVD) and Special Additional Duty (SAD) paid by the appellant on the ground that the appellant though had obtained the advance license for import of duty free imports but had actually could not fulfill the conditions of the said license. Accordingly, had approached the office of DGFT vide letter praying for redemption of Export Obligation (EO) under Export Obligation Period (EOP) of the said license. The authority directed the appellant to pay the requisite Custom Duty along with the interest on the excess import which otherwise was made duty free due to the said advance license in favour of the appellant.

In addition, penalty of 3% on excess CIF value utilized was also directed to be paid. The entire amount was paid by the appellant. Accordingly, the appellant became eligible to take the credit of CVD and Additional CVD paid on the said imports as per erstwhile Cenvat Credit Rules, 2004. By that time before appellant could utilize said credit, new CGST Law had rolled out being effective from 1st July, 2017. Accordingly, the appellant filed an application in terms of section 11B of Central Excise Act, 1944 seeking refund thereof, which has been made permissible even under New GST Regime in terms of section 8 (b) of Section 142 of CGST Act, 2017.

However, a Show Cause Notice was served upon the appellant proposing the rejection of the said refund on the ground that since there is no assessment or adjudication order issued in the case and the letter issued by DGFT asking claimant to pay Customs Duty is not an assessment or adjudication. The said proposal was rejected thereby sanctioning the refund of Rs.14,97,757/-. However, the Reviewing authority of the Department reviewed the said order and observed the proposition of Show Cause Notice to be correct that an appeal was directed to be filed. Pursuant there-to the appeal was filed before Commissioner (Appeals), however, under the provisions of GST Act, 2017. The said appeal of the Department has been allowed by the Order-in-Appeal.

The Coram of Judicial Member Rachna Gupta observed that the appeal before Commissioner (Appeals) was filed by the Department not under the erstwhile law but under the GST Act, 2017. The appeal before Commissioner (Appeals) was not maintainable under GST Act for a refund application which was filed under the erstwhile law. The appeal as such was not maintainable. The order under challenge cannot sustain. Seen either from the point of view of preliminary objection as has come in rebuttal from the appellant and keeping in view the entire observation as far as the merits of the case are concerned, it is held that the order under challenge has wrongly rejected the refund despite an unambiguous provision not only giving entitlement of refund to the appellant but also recognizing for the refund eligible under erstwhile law to have been given in cash under new law.

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