2006 (12) TMI 366 - AT - Central Excise

Summary

Issues:
Refund claim rejection, Extension of stay order, Payment collected under coercion, Applicability of refund claim during pendency of appeal, Legality of impugned order.

Refund Claim Rejection:
The appellants challenged the Order-in-Original confirming duty amount and penalties, leading to a refund claim rejection for Rs. 4,24,415/-. The Commissioner (Appeals) and the Tribunal upheld the rejection, citing lack of specific directions regarding the payment made under coercion during the stay order extension. However, the Tribunal later set aside the demands covered in the appeal, leading to the refund claim approval.

Extension of Stay Order:
The Tribunal initially granted a stay subject to debiting Modvat credit, which was complied with. Subsequently, the appellants applied for an extension of the stay order due to appeal pendency. The Department allegedly collected Rs. 4,24,415/- under coercion during this period. The Tribunal extended the stay order, and the appellants filed a refund claim after the rejection of the claim by the Assistant Commissioner and the Commissioner (Appeals).

Payment Collected Under Coercion:
The appellants contended that the Department collected the amount under coercion during the appeal pendency and after the initial stay order expiry. The Tribunal found this payment relevant for a just decision, especially since the demands covered by the appeal were set aside. The Tribunal held that the impugned order was unsustainable and ordered the refund of Rs. 4,24,415/- with 6% interest per annum.

Applicability of Refund Claim During Pendency of Appeal:
The appellants argued that the termination of proceedings related to the refund claim during the pendency of the appeal rendered it unnecessary to represent the payment made under coercion. They asserted their right to claim a refund once the stay order was extended. The Tribunal agreed, emphasizing the appellants' entitlement to the refund amount paid during the appeal's pendency.

Legality of Impugned Order:
The Tribunal found the impugned order by the lower authorities lacking in legal sustainability. It determined that the appellants were entitled to the refund based on the existence of the stay order during the appeal and the subsequent setting aside of the demands covered by the appeal. The Tribunal allowed the appeal, ordering the refund of the amount paid under coercion with interest.

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