Dept. Can't After Being Unsuccessful, On Its Own, Declare Order For CENVAT Credit Refund To Be Erroneous: Delhi High Court

The Delhi High Court has held that the department cannot, after being unsuccessful before this Court on its own, declare the refund of the CENVAT credit as well as interest on delayed payments to be an erroneous refund.

The bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja has observed that since the Revenue is approaching the Supreme Court impugning the order of the Tribunal as well as the order in appeal passed by this Court holding petitioner entitled to refund of the CENVAT Credit, it would be open to the Revenue to seek interim orders of protection from the Supreme Court. The department cannot, after being unsuccessful before this Court on its own, declare the refund of the CENVAT credit as well as interest on delayed payments to be an erroneous refund. Unless the department is successful before the Supreme Court or the Supreme Court so warrants, there is no question of any refund of the CENVAT credit or refund of the interest paid to the petitioner.

The petitioner, Blackberry, has challenged the Show Cause Notice, by which the petitioner has been directed to show cause as to why CENVAT Credit erroneously refunded along with interest erroneously paid towards interest for delayed payment be not recovered and penalty be not imposed for ineligible availment of CENVAT Credit.

The petitioner had filed refund applications in 2013 and 2014. A show cause notice was issued to the petitioner on January 22, 2020, as to why the refund was not rejected. An order was passed by which the refund for the periods April to June 2012, April to June 2013, and July to September 2013 was rejected.

The petitioner thereafter filed an appeal before the Commissioner (Appeals), and the Commissioner (Appeals) dismissed the appeal.

Aggrieved by the order of the Commissioner (Appeals), the petitioner approached the Customs Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT held that the refund claim of the petitioner could not have been rejected by the Commissioner (Appeals).

The department filed an appeal before the High Court, which was dismissed. The High Court held that no substantial question of law arises. Thereafter, the petitioner filed a Writ Petition before the High Court, seeking a grant of interest on the delayed refund. Said petition was allowed by an order directing the Revenue to process the petitioner's claim for interest under Section 11-BB of the Excise Act, read with Section 83 of the Finance Act. The interest on the delayed refund was sanctioned, and payment was made to the petitioner.

The department contended that it had already processed the file for filing a special leave petition.

The court noted that a special leave petition is still to be filed in the Registry of the Supreme Court. The petitioner has been refunded the amount after being found eligible by the Tribunal for refund and further by this Court towards interest for the delayed refund of the CENVAT credit.

The court held that the show cause notice cannot be sustained and is liable to be quashed.

Counsel For Petitioner: Priyanka Rathi

Counsel For Respondent: Samyak Jain

Case Title: Blackberry India Pvt Ltd -Earlier Known As Research In Motion India Pvt Ltd Versus The Commissioner CGST

Citation: 2024 LiveLaw (Del) 416

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