Bombay HC Seeks Fresh Review of Yamaha’s Pre-GST Rebate Claim After Misapplication of S.142 and SVLDRS [Read Order]

India Yamaha Motor Private Limited, the appellant exported goods on which it had paid National Calamity Contingent Duty (NCCD) and Basic Excise Duty (BED). The assessee initially discharged part of the duty through CENVAT credit and later paid the entire disputed amount in cash after being issued a show cause notice. It filed multiple rebate claims under Rule 18 of the Central Excise Rules, 2002 for exports made before the GST transition.

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While the rebate relating to BED was allowed, the rebate of ₹3.26 crore pertaining to NCCD was rejected by the adjudicating authority. The revisional authority upheld the rejection and invoked Section 142 of the Central Goods and Services Tax Act, 2017 to state that the claim had lapsed with the introduction of GST, compelling the assessee to move the High Court.

Represented by Advocate Darius J. Khambatta, the appellant argued that the revisional authority had mechanically applied Section 142 of the Central Goods and Services Tax Act, 2017 without examining whether the proviso to Section 142(4), which speaks of lapsing of claims, was attracted at all. Subsequently, under Rule 18 of the Central Excise Rules, 2002 rebate for goods exported prior to the GST regime survives the transition.

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He contended that the authority failed to appreciate the independent nature of the rebate scheme and overlooked the impact of the appellant’s settlement under the SVLDRS, 2019. Additionally, also urged that the utilisation of pre-GST CENVAT credit and subsequent cash payment had no adverse bearing on the eligibility for the rebate claim.

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Represented by Advocate B.V. Samant, the respondents asserted that the appellant’s utilisation of BED credit to discharge NCCD was impermissible after the amendment to Rule 3(4) of the Cenvat Credit Rules, 2004. Moreover, since the assessee had opted for settlement under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, the rebate claim stood extinguished.

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The bench of Justice M.S. Sonak, Justice Advait M. Sethna held that the revisional authority had failed to address three key issues: the applicability of Section 142 of the Central Goods and Services Tax Act, 2017, the impact of settlement under the SVLDRS, 2019, and the implications of pre-GST CENVAT credit utilisation on the rebate claim. The Court observed that the impugned order lacked analysis on whether the rebate claim could legitimately lapse under Section 142(4), especially when the claim related to exported goods, which are entitled to duty neutrality.

Further, the Bench noted that the revisional authority did not consider whether the settlement under the SVLDRS extinguished an independent rebate claim under Rule 18 of the Central Excise Rules, 2002. Additionally, the authority failed to examine the relevance of the appellant’s pre-GST CENVAT credit utilisation and its later cash payment.

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Finding that the order suffered from a lack of application of mind on all crucial statutory aspects, the High Court set aside the revisional order and remanded the matter to the Principal Commissioner for a fresh, reasoned adjudication. The reassessment has been directed to be completed within six months.

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