2004 (7) TMI 406 - AT - Central Excise

Summary

Issues Involved:
Whether the Revenue can adjust the duty amount due from the Appellants out of the amount of refund sanctioned to them.

Analysis:

Issue 1: Adjustment of Duty Amount Against Refund
The central issue in this appeal was whether the Revenue had the authority to adjust the duty amount due from the Appellants against the refund sanctioned to them. The Appellant contended that the adjustment should not have been made as the Assistant Commissioner had found no unjust enrichment. Additionally, the Appellants argued that certain demands against which the refund was adjusted had been allowed by the Appellate Tribunal in separate orders, and one demand was still pending. On the other hand, the Departmental Representative justified the adjustment under Section 11 of the Central Excise Act, stating that the demands were not set aside at the time of adjustment.

Issue 2: Interpretation of Section 11 of the Central Excise Act
The Tribunal analyzed Section 11 of the Central Excise Act, which empowers the Department to recover sums due to the Government by deducting them from any money owed to the person liable. The Tribunal noted that at the time of the refund sanction, the demands were still outstanding as they had not been set aside by a higher authority. Therefore, the officer was within his rights to adjust the refund against the outstanding demands. The Tribunal emphasized that once the demands were adjusted against the refund, it was deemed that the refund had been provided to the extent of the adjustment. If any demands were subsequently set aside, the Appellants were required to file fresh refund claims under Section 11B of the Act.

Conclusion:
After considering the arguments from both sides and interpreting the relevant provisions of the Central Excise Act, the Tribunal upheld the decision of the Commissioner (Appeals) to allow the adjustment of the duty amount against the refund sanctioned to the Appellants. The Tribunal found no fault in the impugned order and rejected the appeal, directing the Appellants to file fresh refund claims if any demands were set aside by a higher authority in the future.