2011 (4) TMI 1136 - AT - Central Excise

Refund - original authority after sanctioning the refund adjusted which was reportedly pending from the appellants - According to the appellants there was no valid demand pending as arrears Held that - appeal was against appropriation of 3,78,019/- treating the same as arrears pending against the appellant, in the absence of evidence showing that there were confirmed demands pending against the appellant, adjustment of Rs. 3,78,019/- out of refund sanctioned was not legal and proper. The amount so adjusted should be released, appeal is allowed

Summary

Issues:
- Validity of the adjustment of government dues from the refund claim
- Whether the letters issued by the Superintendent of Central Excise constitute valid demands
- Justifiability of the adjustment of arrears pending against the appellant

Analysis:

Issue 1: Validity of the adjustment of government dues from the refund claim
The case involved a dispute regarding the adjustment of government dues amounting to Rs. 3,78,019/- from a refund claim sanctioned earlier. The Tribunal observed that the Assistant Commissioner had adjusted the amount against arrears of revenue without proper confirmation of the demands. The Tribunal emphasized that the amount deducted from the refund claim could not be considered as arrears, especially since the matter was already under appeal. Consequently, the Tribunal directed the Assistant Commissioner to decide the matter within a specified timeframe, ultimately ruling that the adjustment was not legal and proper, and the deducted amount should be released.

Issue 2: Whether the letters issued by the Superintendent of Central Excise constitute valid demands
The appellants contested the validity of the demands mentioned in letters dated 14-7-97 and 4-9-97 issued by the Superintendent of Central Excise. The Tribunal noted that the letters did not constitute confirmed demands as they were not show cause notices answerable to the competent authority. The appellants had disputed the demands and provided explanations, indicating a lack of confirmation by the competent authority. The Tribunal held that the letters could not be treated as demands confirmed against the appellants, highlighting the absence of evidence showing confirmed demands pending against them.

Issue 3: Justifiability of the adjustment of arrears pending against the appellant
In the absence of confirmed demands pending against the appellant, the Tribunal concluded that the adjustment of Rs. 3,78,019/- from the refund sanctioned on 13-2-98 was not legally justified. The Tribunal emphasized the lack of evidence supporting the existence of confirmed demands against the appellant, leading to the decision that the adjustment was not legal and proper. Consequently, the Tribunal allowed the appeal and directed the release of the adjusted amount, providing consequential relief as per the law.

In conclusion, the judgment by the Appellate Tribunal CESTAT, New Delhi addressed the issues surrounding the adjustment of government dues from a refund claim, the validity of demands made through letters by the Superintendent of Central Excise, and the justifiability of adjusting arrears pending against the appellant. The Tribunal ruled in favor of the appellant, emphasizing the importance of confirmed demands and proper procedures in revenue adjustments, ultimately allowing the appeal and directing the release of the adjusted amount.