Taxpayer eligible for cash refund of cess lying as cenvat credit balance that could not be carried to GST Regime: CESTAT

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Taxpayer will be eligible for cash refund of cessess lying as cenvat credit balance that could not be carried to GST Regime.

The Appellent, Hindustan Zinc Ltd, the ‘Appellent’, is engaged inter alia in the manufacture of Lead and Zinc Concentrates falling under Chapter 26 of the First Schedule to the Central Excise Tariff Act, 1985, and also availing Cenvat credit on various inputs, capital goods and input service in terms of the provisions of the Cenvat Credit Rules, 2004 (Credit Rules).

The Appellant was regularly filing Central Excise ER-1 returns, and as on 30.06.2017, the Appellant was having balance of eligible Cenvat credit of Rs. 13,18,02,879/- (in respect of Central Excise Registration AAACH7354KEM070) and Rs. 3,65,83,241/- (in respect of Central Excise Registration No. AAACH7354KXM003) in its ER-1 returns for June 2017.

4. Out of the aforesaid amounts, Appellant had transitioned the amount of Rs. 13,05,81,973/- and Rs. 3,49,84,516/- respectively, to GST regime by filing Form GST-TRAN-1 (TRAN-1) in terms of Section 140(1) of the Central Goods and Services Tax Act, 2017 (CGST Act), representing the Cenvat credit of Central Excise duty and Service tax paid on inputs, input services and capital goods. As regards the balance amount of Rs. 12,20,906/- and Rs. 15,85,225/- respectively, representing the Cenvat credit of Education Cess and Secondary and Higher Education Cess (collectively, Cess amounts), Appellant had not transitioned the same in GST in view of Guidance Note dated 14.03.2018 issued by Board and amendment made to Section 140 vide Central Goods and Services Tax (Amendment) Act, 2018 (CGST Amendment Act) retrospectively w.e.f. 01.07.2017.

Accordingly, Appellant had filed two refund applications on 29.06.2020 for refund of unutilised Cenvat credit of Cess amounts lying in balance as on 30.06.2017 amounting to Rs. 12,20,906/- and Rs. 15,85,225/- in terms of Section 142(3) of the CGST Act, read with Section 174(2)(c) ibid.

In the above background, two Show Cause Notices, both dated 14.07.2020 (“SCNs”) were issued to the Appellant, proposing to reject the refund applications.

Accordingly, Applicant has prayed for relief with honorable CESTAT.

Hon’ble Judiciary Mr. Anil Choudhary allowed Appeals of the Applicant and set aside the impugned orders. Additionally, it was also ordered that, The Appellant shall be entitled to consequential benefits in accordance with the law.

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