Transitional credit on capital goods received after 1 July 2017 allowed in full under Section 140(2); but excise duty paid on goods cleared for export before GST cannot be transitioned: GSTAT Chandigarh

The Tribunal held that Section 140(2) does not limit transition to 50% of credit or to goods received before the appointed day, but that Section 140 cannot be used as a residuary provision where no specific entitlement exists.

The Goods and Services Tax Appellate Tribunal, Chandigarh Bench, has partly allowed an appeal by an electronics manufacturer, upholding transitional credit of Rs. 2,90,845 on imported capital goods while confirming disallowance of Rs. 6,99,004 claimed for excise duty paid on export consignments [Deltron (A Division of Continental Device India Pvt Ltd) v. Commissioner, CGST Ludhiana & Ors].

The Bench of Jatinder Pal Singh (Judicial Member) and Pradeep Kumar Goel (Technical Member) noted that the capital goods were imported under a Bill of Entry dated 27.06.2017 but received in the factory on 08.07.2017. It held that Section 140(2) permits transition of credit not carried forward in the last excise return, whether 50% or 100%, and does not bar credit on capital goods received after the appointed day where the duty was admissible as CENVAT and as ITC.

However, the excise duty paid on goods cleared for export on 29.06.2017 under a rebate claim, which then suffered IGST on actual export after 01.07.2017, had no home in Section 140. The appellant might have sought refund under the earlier law, but could not use Section 140 as a residuary route. The plea under Section 174(2) failed because no right to such credit had accrued under the existing law.

Interest was held payable on the disallowed amount, and penalty under Section 73(9) was reduced to Rs. 69,900.

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