2015 (6) TMI 1135 - AT - Central Excise

Appropriation/Adjustment of the rebate amount towards the Government dues - Section 11 of the Central Excise Act 1944 - whether the rebate amount can be adjusted/appropriated for the Central Excise duty liability which is under contest and the issue is sub judice before the Appellate Authority? - Held that - the case in hand is squarely covered by the decision of the Bangalore Bench of this Tribunal in the case of Voltas Ltd. v. Commissioner of Central Excise Hyderabad-II 2006 (5) TMI 232 - CESTAT BANGALORE where it was held that Section 11 should be involved only when the demands have reached finality and should not be invoked even at the initial stage - the authorities below are not justified in adjusting/appropriating the amount of rebate towards the demand confirmed in the adjudication order - appeal allowed - decided in favor of appellant.

Summary

Issues:
Adjustment of rebate amount against central excise duty liability.

Analysis:
The appellant, engaged in the manufacture of Optical Fibre Cable, filed rebate claim applications under Rule 18 of the Central Excise Rules, 2002 for exportation of finished goods. The original authority sanctioned the rebate claim but ordered adjustment against arrears/Government dues pending realization from the appellant. The Commissioner (Appeals) rejected the appeal, citing Section 11 of the Central Excise Act, 1944, allowing Central Excise officers to deduct sums due to the Government from any money owing to the person. The key issue in this appeal is whether the rebate amount can be adjusted for Central Excise duty liability under contest. The Tribunal referred to a decision by the Bangalore Bench in Voltas Ltd. v. Commissioner of Central Excise, Hyderabad-II, emphasizing that refund cannot be adjusted against demands that are sub judice and lack finality. The Tribunal held that the authorities were unjustified in adjusting the rebate amount towards the demand confirmed in the adjudication order. Consequently, the impugned order was set aside, and the appeals were allowed with consequential relief.

This judgment highlights the importance of adhering to legal provisions and principles when adjusting rebate amounts against pending demands. It emphasizes that adjustments should only occur when demands have reached finality and not at the initial stage when appeals are pending. The Tribunal's decision in Voltas Ltd. case serves as a precedent, emphasizing that refunds cannot be appropriated against demands that lack finality. The judgment ensures that taxpayers are not unfairly burdened with adjustments that may be overturned in subsequent legal proceedings. Ultimately, the Tribunal's ruling provides clarity on the appropriate circumstances for adjusting rebate amounts against outstanding liabilities, safeguarding the rights of the appellant and ensuring compliance with legal provisions.