2007 (8) TMI 272 - AT - Central Excise

Once the assessee pays time-barred demand then it can t be refunded unless assessee prove that duty was recovered by dept. by coercive measures however that duty can be adjusted towards interest & penalty refund not allowable

Summary

Issues: Duty demand on steel formers, penalty imposition, refund claim, modvat credit, interest and penalty setting aside

The judgment involves a case where the Assistant Commissioner of Central Excise confirmed a duty demand on steel formers manufactured and captively consumed in the process of manufacturing ingots and billets without discharging the duty liability. A penalty equal to the duty amount was imposed on the assessees. The Commissioner (Appeals) initially set aside the adjudication order, but upon remand, the duty demand was confirmed again, along with interest and penalty. The assessees contended that a portion of the duty paid could be adjusted towards interest and penalty. The Revenue challenged the lower appellate authority's finding that further demand might not be legal if all dues were cleared before the show cause notice. The assessees sought a refund of a specific amount, admissibility of modvat credit, and setting aside of interest and penalty.

The judgment highlighted that a time-barred demand for a legitimately payable sum may not be enforceable, but if the duty is paid and accepted, it may not be refundable without evidence of recovery through coercive measures. The lower appellate authority did not sanction a refund but directed adjustment towards interest and penalty. The Revenue's appeal was rejected, as was the assessees' prayer for a refund. The claim for modvat credit required examination based on documents proving duty payment on inputs used in manufacturing. The case was remanded for fresh orders after providing the assessees with a reasonable opportunity to present their defense. The prayer to set aside interest and penalty was rejected, citing relevant judgments from the Hon'ble Punjab & Haryana High Court and the Bombay High Court.

In conclusion, the appeal and cross objections were disposed of accordingly, with the judgment emphasizing the legal principles governing duty demands, refunds, modvat credit, and the setting aside of interest and penalty.