2015 (5) TMI 1071 - AT - Central Excise

Adjustment of refund claim towards the arrear of Govt. dues - Held that - Section 11B of Central Excise Act, 1944 deals with claim for refund of central excise duty. In sub-section (2) of Section 11B, it has been provided that if the refund sanctioning authority is satisfied that the refund is allowable, then the amount of refund shall be sanctioned to the applicant. Since there is no specific restriction imposed in Section 11B of the Act for adjustment of any arrear dues from the refund amount, the same cannot be adjusted by the statutory authority. The provisions for recovery of Govt. dues are contained in Section 11 of the Central Excise Act, 1944. In the adjudication order, Section 11 of the Act has not been invoked for adjustment of the refund amount towards arrear dues. Thus, such adjustment is contrary to the statutory provisions.

Summary

Issues:
Adjustment of refund claim towards arrear of Govt. dues.

Analysis:
The case involved the adjustment of a refund claim towards arrear dues adjudicated as payable by the appellant in previous instances. The appellant's refund claim of Rs. 30,43,763/- was partially allowed, with Rs. 15,07,902/- adjusted towards pending arrear dues, and the balance refunded. The Commissioner (Appeals) upheld the adjustment, leading to the appeal before the Tribunal. The appellant argued that since a stay application had been complied with, the balance dues from the adjudication order were not payable during the appeal, questioning the adjustment against the refund. The Departmental Representative supported the findings of the impugned order.

Upon hearing both parties and examining the records, the Tribunal noted that the central excise demand and penalty confirmed in the adjudication order had been stayed by the Commissioner (Appeals) upon a pre-deposit condition by the appellant. As the balance amount was stayed pending appeal, the Tribunal found no merit in adjusting the entire amount from the refund claim. Referring to Section 11B of the Central Excise Act, the Tribunal highlighted that the Act did not impose any specific restriction on adjusting arrear dues from refund amounts, thereby indicating that such adjustments could not be made by the statutory authority. Additionally, the Tribunal pointed out that Section 11 of the Act, which deals with the recovery of Govt. dues, was not invoked in the adjudication order for adjusting the refund amount towards arrear dues, making such adjustment contrary to statutory provisions.

Consequently, the Tribunal found no merits in the impugned order and allowed the appeal filed by the appellant. The operative portion of the decision was pronounced in open court.