2016 (2) TMI 951 - AT - Central Excise

Refund claim - The appellant is paying duty on captive consumption on the activity of galvanising of bars, rods and channels as per Rule 8 of the Valuation Rules, i.e., cost of raw material plus 10%. Later on, as per CAS-4 they have paid excess to the duty, they filed refund claim - The refund claim was sanctioned but same was adjusted against a demand confirmed against the appellant vide order-in-original No. 6/CE/Comm/BK/RTK/2011, dated 3-5-2011 on the ground that the confirmed demand is pending against the appellant and the same is adjusted - Held that - the demand of ₹ 2,26,34,220/- has been stayed by this Tribunal, in that circumstances, the authorities below by no stretch of means were having any power to adjust the amount of refund sanctioned to the appellant against the demand which has been stayed, this shows that the departmental officers have no respect to the orders passed by this Tribunal. In fact, in a case where the stay has been granted by this Tribunal, there is no such demand against the appellant till the final decision given by this Tribunal. Therefore, the impugned order passed by the authorities below is contrary to law. In that circumstances, same is set aside. Appeal is allowed with direction to the adjudicating authority to give the refund claim of the appellant within fifteen days on receipt of the order.

Summary

Issues:
Refund claim adjustment against pending demand.

Analysis:
The appellant, a public sector undertaking engaged in electricity transmission, paid duty on galvanizing of bars, rods, and channels as per Valuation Rules. Subsequently, they filed a refund claim due to excess duty payment as per CAS-4. The refund claim was adjusted against a demand confirmed in an earlier order. The appellant argued that the demand had been stayed by the Tribunal, thus no pending demand existed. The Tribunal noted that the demand had indeed been stayed, indicating that the authorities had no power to adjust the refund against a stayed demand. The Tribunal criticized the departmental officers for not respecting the Tribunal's orders. Consequently, the impugned order was set aside, and the appeal was allowed with directions to grant the refund claim to the appellant within fifteen days.

This judgment primarily dealt with the issue of adjusting a refund claim against a pending demand. The Tribunal emphasized that when a demand has been stayed by the Tribunal, the authorities cannot adjust a refund against such a demand. The Tribunal found that the departmental officers showed disregard for the Tribunal's orders by adjusting the refund against a stayed demand. The judgment highlighted the importance of respecting legal procedures and decisions, emphasizing that in cases where a stay has been granted, no demand exists until a final decision is made by the Tribunal. As a result, the impugned order was deemed contrary to law and set aside, with directions to grant the refund claim to the appellant promptly.

Overall, the judgment underscored the significance of upholding legal principles and respecting judicial orders. It clarified that adjustments of refund claims against stayed demands are impermissible, emphasizing the need for authorities to adhere to legal procedures and Tribunal decisions. The Tribunal's decision to set aside the impugned order and direct the adjudicating authority to grant the refund claim within a specified timeframe aimed to ensure justice and compliance with legal requirements.