2011 (7) TMI 273 - AT - Central Excise

Debarment order - demand of interest - debarment order has been issued validly debarring assessee using the credit for two months - By implication the credit barred from utilization was available after two months and therefore matter requires regularization - Therefore the respondents are directed to pay the interest as demanded in the order of the original authority - The demand of duty equivalent to credit which was debarred by two months and allowed to be utilized thereafter will amount to double payment - Therefore restore the order of the original authority in so far as it related to demand of interest for two months only. Refund - Since the show cause notice itself demanded only the amount of 16, 24, 872/- on the ground that the same was paid using credit. We have not been shown that the respondents has paid another amount of 3, 53, 171/- thereafter - Therefore we are unable to find the basis on which the Commissioner (Appeals) came to the conclusion that there was double payment. He only refers to the payment of 4 lakhs under TR-6 Challan which has been taken as credit in PLA. The debit has been made as per PLA extracts enclosed for an amount of 3, 53, 171/- on 24.6.01 - Further we find that original authority has taken the stand that 3, 53, 171/- was not paid under protest and there is no indication of protest from the PLA extracts - Therefore the order of the Commissioner (Appeals) sanctioning the refund on the ground that there was double payment is erroneous - Decided in favour of revenue.

Summary

Issues:
1. Default in payment of duty and debarment order
2. Refund claim and double payment

Analysis:

Issue 1: Default in payment of duty and debarment order
The respondents defaulted in duty payment during December 2000 and January 2001, leading to a debarment order by the Assistant Commissioner. The debarment period was from 20.2.01 to 20.4.01, during which the respondents continued to utilize credit amounting to Rs.19,78,043. The Commissioner (Appeals) allowed a refund claim of Rs.3,53,171, stating that the duty payment of Rs.4 lakhs under TR-6 Challan was made under protest. The department argued that the respondents were required to pay the total amount in cash and not through credit, as it was in violation of the debarment order. The Tribunal found that the debarment order was valid, and the respondents were directed to pay the demanded interest for the period of two months.

Issue 2: Refund claim and double payment
The department contended that the duty of Rs.3,53,171 was not refundable as it was paid using credit during the debarment period. The Advocate for the respondents cited a Tribunal decision stating that during default periods, duty liability could be discharged using credit without attracting interest or penalty. However, the Tribunal found that the debarment order was valid, and the respondents were liable to pay interest as demanded by the original authority. Regarding the refund claim of Rs.3,53,171, the Tribunal noted that the Commissioner (Appeals) erred in allowing the refund based on a claim of double payment. The original authority's decision was restored, as there was no evidence of double payment, and the refund was not made under protest, as indicated by PLA extracts.

In conclusion, the Tribunal upheld the debarment order and directed the respondents to pay the demanded interest. The refund claim was denied as there was no evidence of double payment, and the original authority's decision was reinstated.