The Chennai CESTAT in the case of M/s. International Seaport Dredging Pvt. Ltd. Vs. Commissioner of GST & Central Excise vide Order No. 40249/2022 dated 17.06.2022 has ruled that the assessee is entitled to a refund of education cess and Krishi Kalyan Cess lying unutilized in the CENVAT account.

The appellant/assessee is in the business of providing dredging services and is registered with the department for the services rendered by them. They filed a refund claim under section 11B of the Central Excise Act, 1944 for the refund of unutilized CENVAT credit availed on Education Cess, Secondary and Higher Education Cess, and Krishi Kalyan Cess.

The CENVAT credit in respect of Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess to TRAN-1 was carried forward after the introduction of GST. The assessee has claimed a refund of the Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess lying unutilized in their CENVAT account. After due process of law, the original authority rejected the refund claim. The original authority held that under section 140 of the CGST Act, 2017, a refund can be sought only for eligible duties and that duties exclude refund of cess. The appellant filed an appeal before the Commissioner (Appeals), who upheld the rejection of the refund claim.

The appellant relied on the decision of the Madras High Court in the case of Sutherland Global Services Pvt. Ltd. Vs. UOI. The Madras High Court held that the assessee is eligible for a refund of the balance amount of credit of cess lying in the CENVAT account.

The issue raised was whether the appellant was eligible for a refund of Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess lying unutilized in their CENVAT account.

The CESTAT relied upon the judgments of Tribunal in the case of Emami Cement Ltd. Vs. Commissioner of GST & Central Excise, Raipur and Schlumberger Asia Services Ltd Vs. CCE, Gurgaon, where the Tribunal held that the credits earned were vested right of the appellant/ assessee and such right would not be extinguished with change of law unless there was specific provision which would debar such refund and accordingly assessee is entitled to file the refund of Education Cess, SHEC and KKC lying unutilized. In reliance with these judgments, the CESTAT in this case also held that the appellant is entitled to file the refund claim and rejection of refund is not justified, accordingly, the impugned order is set aside.