2012 (4) TMI 526 - AT - Central Excise

Denial of Refund claim - Commissioner allowed partial refund - Held that - As regards the plea of Section 11DDA of the Central Excise Act, 1944, it is suffice to say that this Section confers power upon the Central Excise Officer to provisionally attach property belonging to the assessee on whom show cause notice has been served with a view to protect the interest of Revenue. This power can be exercised by the concerned officer with proper approval of the Commissioner (Appeals). In the instant case appellant has failed to show approval for attachment given by the Commissioner, on the contrary, the Commissioner Central Excise vide impugned order has directed refund of the money which imply that approval for provisional attachment has not been granted - Decided against Revenue.

Issues:
Revenue appeal against Commissioner (Appeals) order allowing refund of Rs. 15 lakhs deposited during investigation. Interpretation of Tribunal and Supreme Court judgments on the Department's right to retain deposited amount. Applicability of Section 11DDA of Central Excise Act, 1944 in the case.

Analysis:

Issue 1: Revenue Appeal Against Commissioner (Appeals) Order

The case involved a Revenue appeal against the order of the Commissioner (Appeals) where the respondent was directed a refund of Rs. 15 lakhs deposited during an investigation by the Department. The respondent, engaged in manufacturing cold drawn steel wires, had paid the amount under pressure from the Department. The Department raised an excise duty demand of Rs. 1,58,73,034/- and rejected the respondent's claim for refund. The Commissioner (Appeals) allowed the refund, relying on previous judgments. The appellant argued that the order was unsustainable due to misinterpretation of the Tribunal and Supreme Court judgments. However, the Tribunal found that the impugned order was justified as no duty liability was determined against the respondent, and the Department could not retain the amount until adjudication.

Issue 2: Interpretation of Tribunal and Supreme Court Judgments

The Tribunal referred to the case of Florida Electrical Ind. Ltd. where it was held that the Department cannot retain deposited amounts if duty liability is not determined. The Supreme Court also dismissed the Revenue's appeal in a similar case. Additionally, the Gujarat High Court emphasized that authorities must act within statutory provisions and cannot retain funds without legal backing. The Tribunal concurred that the Department had no right to withhold the Rs. 15 lakhs until the demand was adjudicated against the respondent. This legal position supported the Commissioner (Appeals) decision to allow the refund.

Issue 3: Applicability of Section 11DDA of Central Excise Act, 1944

The appellant argued that Section 11DDA allowed the Department to attach the assessee's property to protect revenue interests. However, the Tribunal noted that the Section required approval for provisional attachment from the Commissioner, which was not evident in this case. Since the Commissioner had directed the refund, it implied that no approval for attachment was granted. Therefore, the plea based on Section 11DDA was dismissed as it did not apply to the current situation.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the Commissioner (Appeals) order to refund the Rs. 15 lakhs deposited by the respondent during the investigation. The decision was based on the legal position that the Department could not retain the amount until the duty demand was adjudicated, as established by relevant judgments and statutory provisions.

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