2015 (1) TMI 633 - CGOVT - Central Excise

Appropriation of rebate claim against duty demand confirmed by Commissioner of Central Excise - Recovery of dues when stay application is pending - Held that - once the applicant made pre-deposit by way of debit of cenvat account and earlier cash deposit of ₹ 25.00 lakhs, it was not open for adjudicating authority to decide the eligibility of such payment on his own. If the adjudicating authority was not satisfied with the mode of the deposit, he could have waited for the directions of CESTAT. Subsequently, vide order dated 13.12.2012, the CESTAT directed the applicant to pay the pre-deposit in cash in 8 weeks upto 18.01.2013. However, the CESTAT has not vacated the stay. Applicant has claimed to have deposited the said amount on 31.12.12. Recovery proceedings cannot be initiated during the pendency of stay application. As such, original authority has erred in ordering recovery of said amount ignoring the factual position as discussed in above para. Government finds that stay against order of Commissioner of Central Excise was still in force at the time of appropriation of sanctioned rebate claims vide impugned Order-in-Original. Hence, the order of appropriation by original authority is not legal and proper and liable to be set aside on this account alone. In view of above position, Government sets aside impugned Order-in-Appeal and directs that said sanctioned rebate claim may be paid to the applicant provided he has complied with the CESTAT order - Decided conditionally in favour of assessee.

Summary

Issues:
1. Disallowance of rebate claims on duty paid on export of materials.
2. Appropriation of sanctioned rebate amount against confirmed duty demand.
3. Compliance with the directions of the Hon'ble CESTAT.
4. Violation of principles of natural justice in recovery proceedings.
5. Eligibility of payment mode for pre-deposit.

Analysis:
1. The case involved the disallowance of rebate claims on duty paid on export of materials by M/s Tulsyan NEC Ltd. The original authority and the Commissioner of Central Excise (Appeals) had disallowed the rebate claims, leading to an appeal by the applicant.

2. The Deputy Commissioner of Central Excise sanctioned the rebate but appropriated the amount against a demand of duty confirmed by the Commissioner of Central Excise. The applicant filed an appeal with the Hon'ble CESTAT, which directed a pre-deposit of 50% of the duty confirmed. However, the department initiated recovery by appropriating the sanctioned rebate amount before the compliance deadline, leading to further appeals and revisions.

3. The applicant emphasized compliance with the directions of the Hon'ble CESTAT regarding the pre-deposit, highlighting that the department proceeded with recovery despite the stay order and without allowing the applicant to clarify their position, which raised concerns regarding the violation of principles of natural justice.

4. The Government's analysis focused on the procedural aspects, noting that the adjudicating authority erred in ordering recovery during the pendency of the stay application. The Government found that the stay against the order of the Commissioner of Central Excise was still in force at the time of appropriation of the sanctioned rebate claims, rendering the original authority's action illegal and improper.

5. The Government set aside the impugned Order-in-Appeal and directed the payment of the sanctioned rebate claim to the applicant, provided they had complied with the CESTAT order. The decision highlighted the importance of adhering to legal procedures and respecting the directives of higher authorities in such matters.