2012 (12) TMI 935 - AT - Central Excise

Denial of refund claim - Adjustment of refund against demands due - Held that - Proceedings against the show-cause notice dated 24-5-2010 are still pending and the demand confirmed against the appellant have not obtained finality. Further by an order dated 21-9-2011 the demands confirmed against the appellant in proceeding of the show-cause notice dated 24-5-2010 has been stayed on furnishing of Bank Guarantee of Rs. 2 Crores. In these circumstances I am of the view that when the demands against the appellant has not attained finality the Revenue cannot adjust the amount sanctioned against these demands - Decided in favour of assessee.

Summary

Issues:
Adjustment of rebate/refund claim against duty demand arising from separate proceedings.

Analysis:
The appellant, an exporter of synthetic filament yarn, filed rebate/refund claims of duty paid on excisable goods. The claims were sanctioned but later adjusted against demands confirmed in separate proceedings. The appellant challenged the adjustment as premature, citing a stay order granted by the Hon'ble High Court of Bombay, requiring a bank guarantee of Rs. 2 crores. The Revenue had appropriated the sanctioned amount despite the stay order. The Commissioner (Appeals) upheld the adjustment, leading to the appellant's appeal before the Tribunal.

The Tribunal observed that the demands confirmed against the appellant were still pending and had not attained finality. The Hon'ble High Court of Bombay had stayed the demands subject to the bank guarantee. Considering this, the Tribunal held that the Revenue could not adjust the sanctioned amount against unsettled demands. Citing precedents from the Hon'ble High Courts of Madhya Pradesh and Karnataka, the Tribunal set aside the impugned order and directed the adjudicating authority to issue the rebate/refund claim within 15 days.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that adjusting the rebate claim against premature demands was not sustainable. The decision was based on the unsettled nature of the demands and the stay order issued by the Hon'ble High Court of Bombay. The Tribunal's judgment aligned with the principles established by previous court decisions, ensuring that the appellant's right to the sanctioned refund was upheld.