2025(07)LCX0251
USV Private Limited
Versus
Commissioner Central Goods And Service Tax
EXCISE APPEAL NO. 86907 OF 2021 decided on 15-07-2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
REGIONAL BENCH, COURT NO. 5
EXCISE APPEAL NO. 86907 OF 2021
(Arising Out of Order-in-Appeal No. PUN-EXCUS-001-APP-40/2021-22 dated 31.08.2021 passed by the Commissioner (Appeals-I) Central Tax, Pune-I.)
USV PVT LTD
B-1/8, MIDC LOTE PARSHURAM AINDUSTRIAL
Appellant
AREA, TAQLUKA – KHED,
DIST. RATNAGIRI-415 722.
Vs.
COMMISSIONER CENTRAL GOODS AND SERVICE
TAX, KOLHAPUR
VASANT PLAZA COMMERCIAL COMPLEXRAJARAM
Respondent
ROAD, BAGAL CHOWK,
KOLHAPURE-416 001.
Appearance:
Shri Durgesh Nadkarni, Advocate for the Appellant.
Shri Ranjan Kumar, Assistant Commissioner, Authorised Representative for the
Respondent
CORAM:
HON'BLE Dr. SUVENDU KUMAR PATI, MEMBER ( JUDICIAL )
FINAL ORDER NO. A/86091/2025
Date of Hearing: 25/06/2025
Date of Decision :15.07.2025
Denial of refund claim in cash of unutilized cenvat credit accumulated on account of Education Cess, Secondary Higher Education Cess lying balance as on 30.06.2017 sought u/s. 142(3) of the CGST Act, by the Refund Sanctioning Authority that received approval of the Commissioner (Appeals) by way of rejection of Assessee Appellant’s appeal filed before him by his above order No. PUN-EXCUS-001-APP-40/2021-22 dated 31.08.2021 is assailed in this appeal.
2. Facts of the case, in a nutshell, are that appellant has been engaged in manufacture of goods and it is having both Central Excise and Service Tax Registration. It had been availing cenvat credit on duty paid on inputs/ capital goods as well Service Tax paid on input services. In respect of its unutilized credit accumulated on account of education, Secondary Higher Education Cess that was no more available for adjustment against payment of tax in respect of those Cesses since being deleted, Appellant sough for its refund in cash by filing Refund Application on dated 22.10.2020. Thereafter, it was served with a show cause notice dated 02.11.2020 for rejection of its total refund claim of Rs. 6,07,575/- as being filed after the period of limitation of one year, contained in section 11B of Central Excise Act was over. Matter was adjudicated and refund was denied against which appellant sought for necessary relief from the Commissioner (Appeals) by filing appeal before him but the same yielded no fruitful result.
3. During the course of hearing of the appeal, Ld. Counsel for the Appellant Shri Durgesh Nadkarni submitted that show cause notice was restricted to the period of limitation of one year available u/s. 11B of the Central Excise Act, equally applicable to Service Tax matters also but appellant had sought for refund in cash by invoking section 142(3) of the CGST Act wherein non-obstinate clause like ‘notwithstanding anything containing the existing law’, has been in place to allow refund irrespective of time stipulation contained in section 11B which is not applicable to such cash refund u/s. 142(3) of the CGST Act as has already been held in several decisions, since Section 142(3) of CGST Act will have overriding effect over Section 11B of the Central Excise Act except the provision of un-just engagement contained in section 11B(2) of the said Act, as has been held by this Tribunal in several cases including in the cases of (i) Doowon Automotives Systems India P. Ltd -2022(65)GSTL93(T), (ii) Jai Mateshwaari Steels Pvt Ltd. – 2022(63) GSTL 95(T), (iii) Punjab National Bank-2021 (52)GSTL 421(T), (iv) Lifecell International Pvt Ltd -2022 (66) GSTL 446(T) (v) Tata Tele. Trans.Ser.ltd-2024(80) GSTL 104(T), (vi) Hubergroup India P Ltd –Excise Appeal No. 10498 of 2022, (vii) ATV Projects India Limited-Excise Appeal No. 87084 of 2019.
4. Ld. Counsel for the Appellant Shri Durgesh Nandkarni, Advocate further submitted that Ld. Commissioner had traversed beyond the grounds raised in the show cause in framing an issue to the effect as to if Appellant is entitled to cash refund or not, which was not invoked in the show cause notice for which Ld. Commissioner’s order is required to be set aside.
5. Per contra, Ld. Authorised Representative Mr. Ranjan Kumar argued with reference to the decision of Asstt. Commissioner, Chennai V/s. Sutherland Global Services Pvt Ltd. reported in [2023-6-Centax 99(Mad) in WP of 53 of 2020] passed by Hon’ble Madras High Court, in which it was held that unutilized Cess(es) in the hands of assessee has become a dead credit in the year 2015 itself with these levies being dropped by the Finance Act 2015 for which no question of carrying forward or set off of those levies after 01.07.2017 would arise to give a refund to the appellant. He further submitted with reference to the decision of Jharkhand High Court passed in the case of Rungta Mines Ltd Vs. Commissioner Jamshedpur [(2002 1 Centax 151 (Jhar)] wherein it has been held that refund is a statutory right under taxation matter, which can not be claimed like a fundamental or constitutional rights. In citing three other judgments of this Tribunal passed in the cases of (i) BHEL Vs. Commr, Secunderabad [2020 (41) GSTL 465 (Tri-Hyd)], (ii) Mylan Laboratories Ltd. Vs. Commr. Guntur [2020-TIOL-576-CESTAT,Hyd] and (iii) Lupin Ltd Vs. Commr Guntur [2023 (385) ELT 242 (Tri-Hyd)], he also argued that cash refund was denied to the assessee appellant in those cases for which order passed by the Commissioner (Appeals) needs no interference by this Tribunal.
6. I have gone through the case records as well as judicial decisions relied upon by the parties. At the outset, it is to be placed on record, as also been noted in the written submissions filed on behalf of appellant, that education Cess, Secondary Higher Education Cesses which were discontinued w.e.f. 2015 had a reference in Finance Bill 2015 by clause No. 114 wherein Hon’ble Finance Minister had clearly mentioned that he had proposed to subsume Education Cess, Secondary Higher Educating Cess in the Central Excise Act and through notification No. 12 of 2015, those Cesses on inputs or capital goods received after 01-03-2015 would be allowed to be utilized for payment of normal Central Excise duty and not alone Cess component of the said duty. This means that whatever balance was available upto 30.04.2015 got subsumed with Central Excise duty and credits accumulated on its accounts should be treated as Cenvat Credits on Central Excise duty. This being the position prevailing then, appellant had the option to transit those to GST regime through Trans-I Register but as because there was an F.A.Q. issued by the Department that those Cesses can not be transitioned on 31.06.2017, it was lying balance as accumulated credit in the Appellant’s account. Now the question comes as to if seeking refund of the amount would be governed by the period of limitation stipulated in the 11B of the Central Excise Act. The answer is obvious No, for the reason that section 142(3) clearly states that notwithstanding anything containing in section 11B except 11B(2), refund shall be granted in cash. Reproduction of the said provision would bring more clarity to the issue. It read:
“Every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 ( 1 of 1944.)”
(Underlined to emphasise)
7. Therefore, going by the definition as available in the CGST Act, existing law as defined in Section 2(48) of CGST Act 27, means it is the Excise Duty and other laws, Rules etc. existing before GST came into force which provisions except Section 11B sub-section 2, would be in-applicable to grant refund in cash and therefore, the contention of the Ld. Commissioner (Appeals) that limitation period of one year as available in section 11B sub-section(1) or refund provision not being available in the existing law, as held in Rungta Mines Ltd. Case, would have no application in this case wherein refund is sought in cash u/s. 142(3) of the CGST Act.
8. Though not agitated before the Refund Sanctioning Authority/Commissioner (Appeals), Ld. Authorised Representative raised a new ground to support the Commissioner (Appeals)’s order on the strength of Hon’ble Madras High Court decision in the case of Asstt. Commissioner Chennai Vs. Sutherland Global Services Pvt Ltd., cited supra. A close reading of the said decision particularly at para 30, 34, 35 36 would go to show that explanation 1 2 of section 140 of CGST Act, 2017, that deals with “eligible duties and taxes” were already in force by the time the judgment was passed, which is actually not so as has been pointed out by Hon’ble Bombay High Court in the case of Godrej Boyce Mfg Co. Ltd. Vs. Union of India Ors., relevant para is reproduced below to bring clarity to the issue that such refund of cess was not expressly barred by the provision of law and Explanation 3 is dependent on explanation 1 2 to section 140 of the CGST Act, which has not been notified in the Official Gazette. Explanation 3 reads as follows:
For removal of doubts, it is hereby clarified that the expression “eligible duties and taxes” excludes any Cess which has not been specified in Explanation 1 or Explanation 2 and any Cess which is collected as additional duty of customs undesr sub-section(1) of section 3 of the Customs Tariff Act, 1975 (51 of 1975).”
9. As has been held in the scse of Bank of Baroda Vs. Assistant Commissioner, Division-II, CGST Central Excise, Mumbai East that amendment of section 140 made through Section 28 of the CGST (Amendment Act) 2018 and copy of Notification No. 02/2019-CT dated 29.01.2019 which has specifically excluded Explanation 1 2 from being coming into force and referring to the judgment of the Hon’ble Bombay High Court passed in the case of Godrej Boyce Mfg. Co., Vs. Union of India and Ors. Reported in 2021 (11) TMI 157, it can be said that those definition concerning eligible duties were never been brought into force by Gazette Notification till date and Explanation 3 being a clarification to Explanation 1 2 to Section 140 of CGST Amendment Act, cannot be read in isolation to those two Explanations, so as to exclude CESS from being transitioned.
Therefore, when transition to Electronic Credit Ledger namely Trans-I is no more permissible, a refund claim can only be made for eligible cash refund as per provision contained in Section 142(3) of the CGST Act.
10. At this juncture, there is a requirement to reproduce para 11 of the judgment passed by the Hon’nle Bombay High Court for a just decision in this case.
Importantly, Mr. Jetly has not produced any document or material to show that the amendments in Explanation 1 and 2 to Section 140 brought about by Section 28 of the Amending Act have been brought into force. Pertinently, amendment in sub-section (1) of Section (1) of Section 140 has been brought into force by the said notification and the expression ‘of eligible duties’ now finds place therein. However, Explanation 3 seeks to clarify that the expression ‘eligible duties and taxes’, as distinguished from ‘eligible duties, excludes any Cess not specified in Explanation 1 and 2 and any Cess collected as additional duty of customs. The expression ‘eligible duties and taxes’ appears in sub-section (5) of Section 140, whereas the expression used in Sub-section (1) thereof is ‘of eligible duties’. Mr. Hidayatullah seems to be right in this contention that mere introduction of Explanation 3 to Section 140 of the CGST Act, and making it operational with effect from February 1, 2019, would not clothe the respondent no. 3 with the power to issue a show-cause notice on the premise that Education Cess, Higher Secondary Education Cess and Personal Account Amounts are not included in Explanations 1 and 2. For sustaining the validity and/or legality of the impugned show-cause notice, the respondent no. 3 could not have relied upon Explanation 3 exclusively to contend that Cess is not included in ‘eligible duties and taxes’. As the law now stands, Explanation 3 does not have any application to sub-section (1) of Section 140. The Respondent No. 3 while issuing the impugned show-cause notice perhaps overlooked this aspect and also that, parts of the amendments in Explanations 1 2 to Section 140 of the CGST Act sought to be introduced by sub-clause (1) each of clauses (b) and (c ) of Section 28 of the Amending Act are yet to be brought into force. In such view of the matter, a reference to Explanations 1 and 2, as it stands now, may be held to be mindless which, in law, would amount to issuance of a notice without due regard to the provisions of law as well as facts requiring existence or non-existence of a material fact for assumption of jurisdiction.”
(underlined to emphasise)
11. In view of the above findings read with the dictate of law as available in section 142(6) of the CGST Act that commands such payment of refund only in cash, the following order is passed.
THE ORDER
12. The appeal is allowed and Order-in-Appeal No. PUN-EXCUS-001-APP-40/2021-22 dated 31.08.2021 passed by the Commissioner (Appeals-I) Central Tax, Pune-I, is hereby set aside. Respondent Department is directed to pay refund amount of Rs. 6,07,575/- with applicable interest as per provision of law in cash to the appellant within two months of receipt of this order.
(Order pronounced in the open court on 15.07.2025)
(Dr. Suvendu Kumar Pati)
Member (Judicial)