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2003 (1) TMI 496 - AT - Central Excise
Issues:
Validity of Order-in-Appeal affirming Order-in-Original for appropriation of interest from refund claim. Analysis: The appeal questioned the validity of the Order-in-Appeal dated 30-6-2002/9-7-2002, which affirmed the Order-in-Original of the A.C. dated 6-4-1998, directing the appropriation of Rs. 1,23,690/- as interest payment from the refund claim of Rs. 5,00,000/- of the appellants. The adjudicating authority had sanctioned the refund claim but ordered the appropriation of interest based on previous Orders-in-Original by the Commissioner of Central Excise. The Tribunal found that the Commissioner's orders did not specify the appellants' liability to pay interest under Section 11AA of the Act. The Tribunal did not order recovery of interest on the disallowed Modvat credit. Therefore, the adjudicating authority had no legal basis to order the recovery of interest from the refund claim without serving a show cause notice. Additionally, the provisions of Section 11AA were not in force when the credit amount was disallowed, making the recovery of interest invalid. The Commissioner (Appeals) erred in endorsing and affirming the order-in-original without considering the lack of a specific order for interest payment in the previous Commissioner's orders. The impugned order failed to establish the appellants' liability to pay interest along with the reversed credit amount. Consequently, the Tribunal set aside the Commissioner (Appeals) order, allowing the appeal and granting any consequential relief permissible under the law. In conclusion, the appellate tribunal found that the adjudicating authority and the Commissioner (Appeals) had no legal basis to order the recovery of interest from the appellants' refund claim without proper notice or valid grounds. The lack of a specific order for interest payment in previous orders rendered the appropriation of interest invalid. The appeal was allowed, setting aside the Commissioner (Appeals) order, and providing relief to the appellants as per the law.
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