Assessee Entitled To Cash Refund Of Accumulated CENVAT Credit Despite Abolition Of Education Cess: CESTAT

The Ahmedabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that merely because levy of education cess was abolished does not disqualify an assessee from availing Cenvat Credit on Education Cess and Secondary & Higher Education Cess.

The Bench of Ramesh Nair (Judicial Member) and C L Mahar (Technical Member) has observed that “the abolition of Education Cess does not affect the accumulated Cenvat credit which was availed during the time when the Cenvat credit on Education Cess and Secondary & Higher Education Cess was legally available to the assessee.”

Section 142(3) of the CGST Act, 2017 provides that any refund claims for CENVAT credit, duty, tax, interest, or other amounts paid under existing laws must be processed according to those laws.

Section 11B of the Central Excise Act, 1944 provides that a person who wants to claim a refund of excise duty and any interest paid on such duty must submit an application to the Principal Commissioner or Commissioner of Central Excise within two years from the relevant date.

In this case, the assessee was seeking a cash refund of the accumulated and unutilized Cenvat credit for Education Cess and Secondary & Higher Education Cess under Section 142(3) of the CGST Act, 2017, read with Section 11B of the Central Excise Act, 1944.

The department denied the refund claim on the ground that since the levy of Education Cess and Secondary & Higher Education Cess had been abolished, the assessee was not supposed to retain the credit and carry forward the same.

The Tribunal observed that the abolition of Education Cess does not affect the accumulated Cenvat credit which was availed during the time when the Cenvat credit on Education Cess and Secondary & Higher Education Cess was legally available to the assessee. Both the lower authorities have misunderstood the abolishing of education cess, the levy of duty and the availment of Cenvat credit are on different yardstick.

The Tribunal opined that “Merely because the levy of education cess was abolished, it cannot disentitle an assessee from availing the Cenvat credit on Education Cess and Secondary & Higher Education Cess. Therefore, the accumulation of the Cenvat credit in respect of Education Cess and Secondary & Higher Education Cess was absolutely legal and correct. Consequently, they are eligible for refund of the same as provided under Section 142 (3) of the CGST Act, 2017 read with Section 11B of Central Excise Act, 1944.”

Regarding the issue of time bar, the bench noted that as per special provision under section 142 (3) the provision of time bar is not applicable in the case of cash refund of accumulated Cenvat credit.

In view of the above, the Tribunal allowed the appeal.

Counsel for Appellant/ Assessee: S Suriyanarayanan

Counsel for Respondent/ Department: Rajesh R Kurup

Case Title: Hubergroup India Pvt Ltd V. Commissioner of C.E. & S.T.-Daman

Case Number: EXCISE Appeal No. 10499 of 2022 – DB

Click Here To Read/Download Order