2025-VIL-1130-CESTAT-MUM-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Refund of CENVAT Credit, Section 142(3) CGST Act, 2017, Limitation, Unjust Enrichment – Refund claim for cash refund of unutilised CENVAT credit of Education Cess and Secondary & Higher Education Cess lying in balance as of 30.06.2017 – Rejection of on the ground of time barred - Whether the period of limitation of one year prescribed under Section 11B of the Central Excise Act, 1944, is applicable to a claim for cash refund of unutilised CENVAT credit filed under Section 142(3) of the CGST Act, 2017 – HELD - The time limit prescribed under Section 11B of the Central Excise Act is not applicable to a refund claim filed under Section 142(3) of the CGST Act. Section 142(3) of the CGST Act, which governs the refund of CENVAT credit paid under the existing law, contains a specific non-obstante clause stating that any amount eventually accruing 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". This phrasing explicitly carves out only Section 11B(2), which deals with the principle of unjust enrichment, from the overriding effect of the provision. Consequently, all other provisions of the existing law, including the one-year time limitation contained in Section 11B(1), are rendered inapplicable to such refund claims - The legislative intent is to allow the cash refund of such accrued credits irrespective of the time stipulations in the erstwhile law. Therefore, the rejection of the refund claim on the grounds of being time-barred is legally untenable and set aside – The Department is directed to pay refund amount with applicable interest as per provision of law in cash to the appellant – The appeal is allowed - Refund of unutilized credit of Education Cess and Secondary & Higher Education Cess that was in its books as of 30.06.2017. The Revenue contended that such cesses became a "dead credit" when the levies were abolished and were not "eligible duties and taxes" that could be transitioned or refunded under the GST regime - Whether unutilized credit of Education Cess and Secondary & Higher Education Cess, lying in balance as on the appointed day (01.07.2017), is eligible for a cash refund under Section 142(3) of the CGST Act, 2017 – HELD - The argument that such credit is "dead" or ineligible based on Explanation 3 to Section 140 of the CGST Act is flawed because this Explanation cannot be read in isolation. Explanation 3, which clarifies that "eligible duties and taxes" exclude certain cesses, is dependent on Explanations 1 and 2 of Section 140. However, the amendments to Explanations 1 and 2, which were intended to define the scope of "eligible duties," were never brought into force through a Gazette Notification. Since Explanation 3 is merely a clarification to these un-notified provisions, it has no independent application to bar the refund of Cesses - Furthermore, the Finance Bill 2015 had subsumed these cesses into the basic excise duty, making the credit available for utilization as normal CENVAT credit. As the transition of such credit to the GST Electronic Credit Ledger is no longer possible, the only available recourse is a cash refund as mandated by Section 142(3) of the CGST Act. The assessee was therefore held to be entitled to the cash refund of the unutilized Cesses.
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