Assessee entitled to refund of unutilized Cenvat credit of Education and S&H Education Cess

The CESTAT, Ahmedabad in USV Private Limited v. Commissioner of Central Excise & ST, Daman [Final Order No. A/10198/2023 dated February 6, 2023] has set aside the order of the Revenue Department denying refund of Cenvat credit to the assessee. Held that, the assessee is legally entitled for cash refund of accumulated and unutilized Cenvat credit of Education Cess and Secondary and Higher Education Cess as per Rule 3 of the Cenvat Credit Rules, 2004 ("the Cenvat Credit Rules"), as such credit could not be utilised due to the introduction of Goods and Service Tax ("GST"). Further held that, such refund is not time barred.

Facts

USV Private Limited ("the Appellant") has filed this appeal against the order ("the Impugned Order") passed by the Commissioner of Central Excise, Customs and Service Tax-Daman ("the Respondent") wherein the refund of unutilized Cenvat credit was denied on the grounds, that the Cenvat credit of Education Cess and Secondary and Higher Education Cess is not admissible and that the refund was time-barred. The Appellant submitted that the issue is no longer res-integra as various high courts have already decided the issue in favour of the assessee.

Issue

Whether the Appellant is entitled for cash refund against the accumulated and unutilized Cenvat credit of Education Cess and Secondary and Higher Education Cess?

Held

The CESTAT, Ahmedabad in Final Order No. A/10198/2023 held as under:

• Observed that, the Appellant were not in a position to utilize Cenvat credit of Education Cess and Secondary and Higher Education Cess due to introduction of GST and further that, as per to Rule 3(1) clause (vi) and (via) of the Cenvat Credit Rules, the credit of Education Cess and Secondary and Higher Education Cess is clearly allowed.
• Stated that, the Appellant is legally entitled for Cenvat of Education Cess and Secondary and Higher Education Cess.
• Observed that, the Hon’ble High Courts in various cases have considered limitation and held that in case of refund of accumulated unutilized credit, limitation shall not apply.
• Relied on the judgment of the Hon’ble Karnataka High Court in the matter of Union Of India v. Slovak India Trading Co. Pvt. Ltd [C.E.A. No. 5/2006 dated July 7, 2006] wherein it was held that the assessee can claim refund of unutilized credit when there was no manufacture in the light of closure of factory and limitation shall not apply.
• Held that, the Appellant is entitled for cash refund of accumulated and unutilized Cenvat credit of Education Cess and Secondary and Higher Education Cess and such refund is not time-barred.
• Set aside the Impugned Order.

Relevant Provisions

Rule 3(1) of the Cenvat Credit Rules

"CENVAT credit-

(1) A manufacturer or producer of final products or a provider of output service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of -
…
(vi) the Education Cess on excisable goods leviable under section 91 read with section 93 of the Finance (No.2) Act, 2004 (23 of 2004);
(via) the Secondary and Higher Education Cess on excisable goods leviable under section 136 read with section 138 of the Finance Act, 2007 (22 of 2007);"