Refund Of CVD & SAD Paid After GST Introduction Maintainable U/S 142(3) Of CGST Act: CESTAT
Pranav B Prem
The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that refund of Countervailing Duty (CVD) and Special Additional Duty (SAD), paid after the introduction of GST due to non-fulfilment of export obligations, is maintainable under Section 142(3) of the CGST Act, 2017. The bench of Dr. Ajaya Krishna Vishvesha (Judicial Member) clarified that where such payments are made post-GST on imports made under the Advance Authorization scheme prior to July 1, 2017, refund can be claimed since Cenvat credit cannot be availed in the GST regime.
Background of the Case
The appellant, Rashtriya Metal Industries Ltd., is a manufacturer of brass strips, PB strips, and brass caps. It imported inputs duty-free under the Advance Authorization scheme during January 2012 to January 2014, on the condition of fulfilling export obligations. However, due to non-fulfilment of part of the obligations, the department issued a deficiency letter dated 18.01.2018, after GST had come into force, asking the appellant to regularize the default by paying applicable CVD and SAD.
The appellant paid ₹70,33,633/- as CVD and ₹41,64,032/- as SAD on 27.01.2018. Since there was no mechanism under GST to avail Cenvat credit of these duties, the assessee filed a refund claim under Section 142(3) of the CGST Act, 2017. The Assistant Commissioner rejected the claim, holding that Section 142(3) applies only to “eligible duties” for which credit was available prior to GST. This view was upheld by the Commissioner (Appeals), who dismissed the appeal.
Contentions
The appellant argued that:
The payment was a consequence of pre-GST imports, though discharged after 01.07.2017.
Since Cenvat credit was not possible in GST regime, refund was the only remedy under Section 142(3).
The deficiency letter was not an adjudication order but a facilitation mechanism for regularizing default; therefore, it could not restrict refund rights.
The Revenue countered that the refund was not admissible because the payment was made after July 1, 2017, and was not covered by transitional provisions.
Findings of the Tribunal
The Tribunal observed:
The Advance Authorization imports were made before GST, and the duties demanded later were in respect of those imports. Hence, they qualify as pre-GST duties.
Section 142(3) of CGST Act allows refund of any amount paid under the existing laws, if not admissible as input tax credit. The appellant’s case falls squarely within this provision.
The deficiency letter issued by DGFT was only to regularize the bona fide default and cannot be equated with a fresh assessment or adjudication.
The Commissioner (Appeals) erred in rejecting the claim solely on technical grounds, ignoring the legislative intent of seamless credit and refund during transition.
CESTAT set aside the orders of lower authorities and allowed the appeal, directing that the refund claim of the appellant be processed under Section 142(3) of the CGST Act, 2017.
Appearance
Counsel for Appellant/ Assessee: Vineet Nagla
Counsel for Respondent/ Department: Anand Kumar
Cause Title: Rashtriya Metal Industries Limited V. Commissioner of CGST & Central Excise, Surat
Case No: Excise Appeal No. 10388 Of 2020-SM
Coram: Dr. Ajaya Krishna Vishvesha (Judicial Member)
