M/s. Umberto Ceramics International Private Limited, Sadolia, Prantij (henceforth, “appellant”) has filed the present appeal against the Order-in-Original No. 11/Ref/CGST/AC/HMT/2018-19, dated 12-12-2018 (henceforth, “impugned order”) issued by the Assistant Commissioner, CGST, Division-Himatnagar, Gandhinagar (henceforth, -, “adjudicating authority”).

2. The facts of the case, in brief, are that the appellant, a manufacturer of tableware, kitchenware etc filed refund claim of ₹ 26,80,547/- on 28-6-2018 under Rule 5 of Cenvat Credit Rules, 2004 for the quarter of April to June, 2017 in respect of Cenvat credit availed on various inputs as majority of their final products were exported. Said claim was rejected under impugned order holding that the claimant had not filed mandatory declaration electronically in the Form GST TRAN-1 as stipulated under Rule 117 of Central Goods and Services Tax Rules, 2017.

3. Being aggrieved with the impugned order the appellant preferred this appeal contesting inter alia, that ground for rejection of refund is erroneous and absurd; that they were not required to carry forward the credit for which they filed refund under Rule 5 of Cenvat Credit Rules, 2004; that under proviso to Rule 142(3) of CGST Act, 2017 there is specific restriction as regard carry forward of amount in TRAN-1 for which refund is being filed under erstwhile provisions; that Rule 117 of Central Goods and Services Tax Rules, 2017 is applicable in case where assessee engaged in manufacture of exempted goods became taxable in GST regime which is not present case; that their claim of accumulated input tax credit filed under Rule 5 of Cenvat Credit Rules, 2004 required to be processed in accordance with the provisions of Central Excise law read with Cenvat Credit Rules, 2004 and not under GST Law even if the same is filed after the appointed day. They stated the provisions of Section 142(3) of CGST Act, 2017 in this regard and stated that non-filling of TRAN-1 cannot be the reason to reject the legitimate refund claim.

4. In the Personal hearing held on 3-4-2019 Shri Vijay Khumbhat, Chief Finance Officer of the appellant firm reiterated the grounds of appeal.

5. I have carefully gone through the appeal wherein refund of Cenvat Credit not carried forwarded under GST is claimed by the appellant under Rule 5 of Cenvat Credit Rules, 2004 on 28-6-2018 i.e., after appointed day, it needs to be determined whether refund under erstwhile Rule 5 of Cenvat Credit Rules, 2004 is admissible under GST regime to the claimant who has not filed GST TRAN-1 required under Rule 117 of Central Goods and Services Tax Rules, 2017.

6. I find that the adjudicating authority has rejected the claim on the ground that the appellant had not filed declaration electronically in the Form GST TRAN-1 as stipulated under Rule 117 of Central Goods and Services Tax Rules, 2017. I observe two facts are undisputed. One, the claim has been filed after the appointed day and second, the claim has been preferred by the claimant under Rule 5 of Cenvat Credit Rules, 2004 and governed by Notification No. 27/2012-C.E. (N.T.), dated 18-6-2012, While introducing the GST, necessary transitional provisions have been made in the Central Goods and Services Tax Act, 2017. Relevant provisions of the same are reproduced below :

SECTION 142. Miscellaneous transitional provisions. –

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(3) Every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT credit, duly, 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) :

Provided that where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse :

Provided further that no refund shall he allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day lias been carried forward under this Act.

6.1 Section 42(3) above stipulates that refund claim filed in respect of Cenvat credit shall be disposed of in accordance with the provisions of existing law. It is therefore, observed that the adjudicating authority was required to process the present claim in accordance with Rule 5 of Cenvat Credit Rules, 2004 and in accordance with the procedure, safeguards, conditions and limitations prescribed under Notification No. 27/2012-C.E. (N.T.), dated 18-6-2012. Perusal of the impugned order does not reveal that it has been attended by the [***] related authority in accordance with the same. So far as filing of refund claim under Rule 5 of Cenvat Credit Rules, 2004 & notification supra concerns I find that there is no restriction for the same under Central Goods and Services Tax Act/Rules, 2017 for the same. It is therefore, obvious that refund claim if any arose attracting the provisions of existing law, it can be claimed subject to fulfillment of the procedure/conditions stipulated under such provisions of existing law. Therefore, the claim filed by the appellant even after introduction of GST was a routine and valid step for which no one can prevent them. On receipt of refund application, it becomes the function of the competent authority to scrutinize its legality and either sanction or reject the same applying the provisions under which it is claimed. I observe that in the instant case, when the appellant himself has preferred the claim under Rule 5 of Cenvat Credit Rules, 2004, deciding of the claim under CGST Act/Rules was not permissible, more particularly when transitional provisions i.e. Section 42(3) makes if mandatory on the authority to dispose such claim in accordance with the provisions of existing law. I therefore, find that Rule 117 of CGST Rules, 2017 applied in processing/deciding the claim by the impugned authority is faulty.

6.2 The appellant has forcefully argued that their claim of accumulated input tax credit filed under Rule 5 of Cenvat Credit Rules, 2004 required to be processed/disposed of in accordance with the provisions of Central Excise, law read with Cenvat Credit Rules, 2004 and not under GST law even though the same is filed after the appointed day. In view of the above observations, I find force in such plea of the appellant. It is also observed that since the claim has not been processed in accordance with the provisions claimed/meant for, it first needs scrutiny applying Rule 5 of Cenvat Credit Rules, 2004 & notification supra under Central Excise law and to arrive at appropriate decision. Therefore, in the interest of justice, it would be just and proper to remit the matter to adjudicating authority to scrutinize the claim in accordance with the provisions of Central Excise law read with Cenvat Credit Rules, 2004.

7. I further find that the impugned order at para 10 observes that “on going through the documents furnished by the claimant, I find that the said claimant has not fulfilled the conditions as laid down in Rule 117 of Central Goods and Service Tax Rules, 2017 as the Taxpayer has not filed the TRAN-1 within stipulated time which is mandatory”. However, it is observed that that Rule 117 of Central Goods and Services Tax Rules, 2017 was amended by inserting the following vide Notification No. 48/2018-Central Tax, dated 10-9-2018

(i) in rule 117,

(a) after sub-rule (1), the following sub-rule shall be inserted, namely :-

“(1A) Notwithstanding anything contained in sub-rule (1), the Commissioner may, on the recommendations of the Council, extend the dale for submitting the declaration electronically in FORM GST TRAN-1 by a further period not beyond 31st March, 2019, in respect of registered persons who could not submit the said declaration by the due date on account of technical difficulties on the common portal and in respect of whom the Council has made a recommendation for such extension.”

7.1 As provided above, the date of filing of TRAN-1 was extended upto 31st March, 2019 and therefore, the finding of the adjudicating authority that the appellant has not filed TRAN-1 within stipulated time, is not correct as the impugned order has been passed well before expiry of stipulated time limit i.e. 31st March, 2019.

8. It would also be relevant to mention here the second proviso to Section 142(3) of CGST Act, 2017 which says :

“Provided further that no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act.”

Above proviso puts restriction that no refund shall be allowed of any amount of Cenvat credit which has been carried forward under the GST Law. Therefore, it is observed that if the appellant had filed TRAN-1 and claimed the credit, in that case, it would had resulted in claiming of double benefit by the appellant. Therefore non-filling of TRAN-1 cannot be the reason to reject the refund claim if the claim was otherwise lawful.

9. In view of the above observations, the grounds of denial of the refund claim is rejected and the matter is remitted back to the adjudicating authority to scrutinize the claim in accordance with the provisions of Central Excise law read with Cenvat Credit Rules, 2004 i.e. Rule 5 and Notification No. 27/2012-C.E. (N.T.), dated 18-6-2012 and to order a fresh on eligibility of the refund to the appellant ensuring principle of natural justice.

10. The appeal filed by the appellant stands disposed of in above terms