ORDER

This is an appeal filed by M/s. Vasudha Pharma Chem Limited, Plot No. 79, J.N. Pharma City, Parwada, Thanam Village, Visakhapatnam (hereinafter referred to as ‘Appellant’) against the tax orders passed by the Assistant Commissioner (ST), Steel Plant Circle, Visakhapatnam Division, (hereinafter referred to as ‘Assessing Authority’/for short ‘A.A.’) for the tax period November, 2017 under APGST Act, 2017 in GSTIN : 37AAACV9857D1ZZ, in RFD06_TPF088725, dated 31-5-2018, disputing levy of tax of ₹ 3,06,785/-.

2. The case is posted for hearing details are as under :

Sl. No.	Date of notice issued	Posted for hearing date	Status of hearing
1.	19-1-2019	30-1-2019	Attended
2.	30-1-2019	20-2-2019	Attended

3. Sri Nunna Murali, Corporate Head Commercial and authorized representative of the firm (hereinafter referred to as ‘A.R.’) has appeared on earlier occasions and finally on 20-2-2019 for arguing the case. Finally, the appeal was heard by the Appellate Authority.

Statement of facts :-

4. The appellant M/s. Vasudha Pharma Chem Ltd., Visakhapatnam is an assessee on the rolls Assistant Commissioner (ST), Steel Plant Circle, Visakhapatnam Division and doing business in the manufacturer of bulk drugs.

5. The A.A recorded that on verifying the CGST refund claim of the appellant, it is revealed that the CGST refund claim is contrary to the provisions of CGST Act, 2017. Hence, rejected such portion of refund claim, which was sanctioned as CENVAT credit by the proceedings passed by “Shri N.A.J.V. Shyambabu, Maritime Commissioner, Room No. 811, 7th Floor, Kendriya Shulk Bhavan, L.B. Stadium Road, Basheerbagh, Hyderabad”.

6. The A.A. further recorded that appellant has claimed refund of ₹ 46,76,158/- under CGST in November, 2017. On verification before issuance of RFD-06 it was noticed that an amount of ₹ 11,73,661/- pertaining to the claim on Central Excise Credit (Rebate OIO) was included. This amount needs to be claimed under Central Excise Act only but not under GST Act as this amount doesn’t pertain to unutilized ITC on supply of goods under GST.

7. The A.A further stated that the entire amount of ₹ 11,73,661/- could not be restricted under CGST in August, 2017 only as 90% of refund was already sanctioned through RFD-04. Hence the entire amount of ₹ 11,73,661/- was restricted under CGST over a period of 4 months i.e., from August, 2017 to November, 2017 by issuing RFD-06. Accordingly an amount of ₹ 3,06,785/- was rejected under CGST for the month of November, 2017 by issuing RFD-06.

8. Thus, the A.A has rejected a refund claim of ₹ 3,06,785/- by restricting the input under CGST Act, 2017 for the month of November, 2017.

9. Aggrieved by the above orders passed by the assessing authority, the appellant has preferred the present appeal and disputed the levy of tax of ₹ 3,06,785/-.

Grounds of appeal :

10. The grounds of appeal filed by appellant in the appeal are extracted hereunder;

Statements of facts :

The appellate authority rejected the appeal because we have not filed on electronic appeal through GST portal in Form GST APL-01 now the same thing re-appealed.

Grounds of appeal :

This is refund matter before GST era we got the Refund orders 90% cash and 10% to avail CENVAT credit, but the orders we have received after GST era i.e. Aug-2018.

Prayer :

This is my humble request kindly sanctioned the refund amount of ₹ 3,06,785/-.

PARA-WISE REMARKS :

The Assistant Commissioner (ST), Steel Plant Circle, Visakhapatnam Division, has submitted para-wise remarks against the grounds of appeal, and the same are extracted hereunder;

It is submitted that M/s. Vasudha Pharma Chem Ltd., Visakhapatnam, Registered Taxable Person vide GSTIN.37AAACV9857D1ZZ and on the rolls of the Assistant Commissioner (ST), Steel Plant Circle, Visakhapatnam.

It is further submitted that they applied for Refund claim in RFD-01A for the tax period 11/2017 and claimed CGST refund of ₹ 46,76,158/-. Accordingly RFD-04, sanctioning 90% of the refund claim was issued within the stipulated time. On further verification it is revealed that the claim is contrary to the provisions of CGST Act, 2017 and hence rejected 10% portion of the refund claim i.e., ₹ 3,06,785/- vide RFD-06 TPF088725, dated 31-5-2018.

Aggrieved by the order, the taxpayer filed an Appeal before the Appellate Joint Commissioner (ST), Vijayawada. The Appellate Authority, communicated the ground of appeal filed by the Taxable person in the reference 2nd cited and called on to submit para-wise remarks.

In view of the above, para wise remarks are herewith submitted duly examining the grounds of appeal communicated in the reference cited for kind perusal of the Appellate Authority.

Submissions of the appellant :

‘We have filed for the ITC refund of the balance amount of ₹ 3,17,277/- from the AC(ST) Steelplant circle, Visakhapatnam issued RFD06_TPF088725, dated 31-5-2018 amount of ₹ 3,06,785/-. Appellants engaged in the manufacture of bulk drugs and drug intermediates falling under Chapter No. 29 of the Central Excise Tariff Act, 1985.

We have received above order as on dated 28-6-2018. So rejected on ITC refund sanctioned order No. RFD06_TPF088725, dated 31-5-2018. We are eligible to file refund. This is our humble request kindly sanction refund amount of ₹ 3,06,785/-”

Remarks :

The Registered Taxable Person (RTP) has claimed refund of ₹ 46,76,158/- under CGST in November, 2017. On verification before issuance of RFD-06 it is noticed that an amount of ₹ 11,73,661/- pertaining to the claim on Central Excise Credit (Rebate OIO) was included. This amount needs to be claimed under Central Excise Act only but not under GST Act as this amount doesn’t pertain to unutilized ITC on supply of goods under GST.

The entire amount of ₹ 11,73,661/- could not be restricted under CGST in August 2017 only as 90% of refund was already sanctioned through RFD-04. Hence the entire amount of ₹ 11,73,661/- was restricted under CGST over a period of 4 months i.e., from August 2017 to November 2017 by issuing RFD-06. Accordingly an amount of ₹ 3,06,785/- was rejected under CGST for the month of November, 2017 by issuing RFD-06.

Further, I submit that the Excess payment of Central Excise and duties shall be claimed in their TRAN-1 only. Instead of claiming so, the dealer claimed Refund of such excess Credit of Central Excise and duties, which is contrary to the provisions of CGST Rules. Thus, under Sec. 142(4) of GST Act, every claim for refund filed after the appointed day for refund of any duty or tax paid under existing law in respect of the goods or services exported before or after the appointed day, shall be disposed of in accordance with the provisions of the existing law. Therefore, the claim of excess credit under Central Excise Act cannot be allowed as input tax credit under GST Act, 2017. Hence, the claim of refund to the extent of Central Excise Credit is rejected.

Discussion :

11. Perused the grounds of appeal filed by the appellant alongside the impugned order passed by the assessing authority i.e. Assistant Commissioner (ST), Steel Plant Circle, Visakhapatnam Division.

12. The appellant explained that they have claimed rebate of duty paid towards Central Excise Duty on export of their products. After verifying their claim, the Maritime Commissioner has sanctioned rebate and allowed certain portion as cash refund and balance as credit to Cenvat credit account. As such, they have disclosed the excess Cenvat credit as part of refund under CGST Act, 2017.

13. The appellant mainly contended that, since they have received the orders by Maritime Commissioner during GST period, hence they have added the excess Cenvat credit as part of refund claim and requested to sanction the refund claim on account of excess Cenvat credit available to them.

Issues for adjudication :

(1)     Whether the contentions of the appellant against the refund rejection orders by A.A. have any dependable and sustainable provisional support of GST Act or not?

(2)     Whether the rejection of refund claim by A.A. is in tune with the envisaged provisions of Act/Rules and instructions issued by Government or not?

Analysis :

14. Perused the grounds of appeal along with assessment order passed and para-wise remarks forwarded by the A.A., and after thorough verification of records, the findings of the appellate authority are stated below;

15. To ascertain any rationality in the contention of the appellant, the inspecting authority has been asked to submit Para-wise remarks against the grounds of the appellant and the AA has submitted para-wise remarks by strongly reiterating the findings as in the assessment order.

16. The A.A also remarked that any excess credit available under Central Excise shall be claimed through Tran-01 only, but the appellant attempted to claim as a refund of excess CENVAT credit. The A.A observed that such excess credit of any existing law pertaining to the period before appointed day i.e. 1-7-2017 shall be disposed off in accordance with the provisions of existing law i.e. Central Excise Act & Rules. These remarks of A.A strongly advocating that claim of excess CENVAT credit pertaining to Central Excise Act cannot be allowed as refund under GST Act.

17. This specific type of disputes, have been discussed Central Board of Excise and Customs (GST Policy Wing) Circular dated 15-3-2018 and clarified as below :

Circular No. 37/11/2018-GST

F. No. 349/47/2017-GST

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

GST Policy Wing

New Delhi, Dated the 15th March, 2018

10. Refund of taxes paid under existing laws : Sub-sections (3), (4) and (5) of Section 142 of the CGST Act provide that refunds of tax/duty paid under the existing law shall be disposed of in accordance with the provisions of the existing law. It is observed that certain tax payers have applied for such refund claims in FORM GST RFD-01A also. In this regard, the field formations are advised to reject such applications and pass a rejection order in FORM GST PMT-03 and communicate the same on the common portal in FORM GST RFD-01B. The procedures laid down under the existing laws viz., Central Excise Act, 1944 and Chapter V of the Finance Act, 1994 read with above referred sub-sections of Section 142 of the CGST Act shall be followed while processing such refund claims.

10.1 Furthermore, it has been brought to the notice of the Board that the field formations are rejecting, withholding or re-crediting CENVAT credit, while processing claims of refund filed under the existing laws. In this regard, attention is invited to sub-section (3) of Section 142 of the CGST Act which provides that the amount of refund arising out of such claims shall be refunded in cash. Further, the first proviso to the said sub-section provides that where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse and therefore, will not be transitioned into GST. Furthermore, it should be ensured that no refund of the amount of CENVAT credit is granted in case the said amount has been transitioned under GST. The field formations are advised to process such refund applications accordingly.

A decent & deep comprehension of above instructions plainly point towards a conclusion that any excess credit available under existing law i.e. Central Excise Act shall not be claimed as refund under CGST Act, 2017. The above circular categorically directed that, no refund of any amount of CENVAT credit is to be granted under GST Act.

Conclusion :

18. In view of above discrete and relevant instructions to the present dispute, contemplating for not sanctioning refund of excess Cenvat credit during GST period. Hence, it is held that the refund rejection orders of A.A are legally sustainable and in tune with the provisions of CGST Act. Therefore, appeal stands dismissed.

19. In the end, the appeal is dismissed and the tax so levied is confirmed.