2012 (9) TMI 886 - AT - Central Excise

Denial of rebate claim - Whether the first appellate authority was correct in setting aside the adjustment of the sanctioned rebate to the dues from the respondent should not have been done as the dispute was before the higher forum i.e. Tribunal - Held that - there is an appeal against order in appeal No. 313/09 and Tribunal had granted an unconditional stay. The invocation of provisions to Section 11 of the Central Excise Act, 1944 to such an amount which is unconditionally stayed by the Tribunal and adjusting the said amount from the rebate claim sanctioned to the respondent is incorrect as there is no government dues as on date against the respondent. I find that the first appellate authority was correct in coming to the conclusion while setting aside the impugned order which did the adjustment of the dues against the rebate claim filed and sanctioned by the assessee. I find that the ratio of the decision of the Tribunal in the case of Girdharilal Sugar Alled Industries Ltd. (2004 (1) TMI 205 - CESTAT, NEW DELHI) is also in favour of such a proposition - Decided against Revenue.

Summary

Issues:
Adjustment of rebate claim against government arrears without confirmed demands.

Analysis:
1. The case involves the respondent, engaged in manufacturing excisable goods, who exported fabrics and filed rebate claims. The rebate claims were adjusted against government arrears arising from a previous order.

2. The respondent appealed against the adjustment of rebate claims, arguing that the adjudicating authority incorrectly adjusted the dues against their rebate claims. The first appellate authority agreed, citing provisions of Section 11 of the Central Excise Act and CBEC circulars.

3. The Departmental Representative argued that there was no bar in law for appropriating the rebate amount against government dues, as there was no stay order against the previous order. The DR contended that the circular cited by the first appellate authority did not prevent adjusting amounts due to the government.

4. The respondent's counsel referred to relevant case law to support the argument that appropriation of amounts against dues can only be done when there are confirmed demands. They highlighted that an unconditional stay had been granted by the Tribunal regarding the previous order under challenge.

5. The Tribunal considered the submissions and records presented by both sides. The main issue was whether the adjustment of the sanctioned rebate against the dues, while the dispute was pending before a higher forum, was justified.

6. The first appellate authority found that the adjustment of dues against the rebate claims was premature, especially since the previous order was under appeal and an unconditional stay had been granted by the Tribunal. The authority directed the AC/DC to grant the sanctioned rebate if no stay was obtained against the Tribunal's order.

7. The Tribunal upheld the first appellate authority's decision, emphasizing that adjusting amounts against dues when there were no confirmed government dues was incorrect. The Tribunal found that the adjustment was not permissible when there was no outstanding government liability.

8. Ultimately, the Tribunal rejected the appeals filed by the Revenue, affirming the correctness of the first appellate authority's decision and concluding that the adjustment of rebate claims against non-existent government dues was not legally permissible.