2008 (3) TMI 140 - AT - Central Excise

Appellant is a merchant exporter and exported chemicals manufactured by M/s. ICI - excise disputes were relating to M/s. ICI but demands were confirmed against appellant original authority, who sanctioned the rebate claims to the appellant, adjusted the amounts towards dues from M/s. ICI (India) Ltd. - merely for the reason that appellant is exporting goods of M/s. ICI, dues pending to M/s. ICI cannot be recovered from appellant

Summary

Issues:
Adjustment of rebate claim against dues from a different legal entity.

Analysis:
The case involves an appeal against the order of the Commissioner (Appeals) related to the adjustment of rebate claims against dues from a different legal entity. The appellant, a merchant exporter, exported chemicals manufactured by M/s. ICI (India) Ltd., Kanpur. The rebate claim amounting to Rs.1,86,92,731/- was sanctioned to the appellant. However, there were excise disputes against M/s. ICI (India) Ltd., and the amounts due from them were adjusted against the rebate claim of the appellant by the original authority.

The appellant contended that they and M/s. ICI (India) Ltd. are separate legal entities, and the rebate sanctioned to the appellant should not be adjusted against the dues of M/s. ICI (India) Ltd. The dispute did not concern the eligibility of the rebate claim but the adjustment of dues under Section 11 of the Central Excise Act. The appellant relied on a Tribunal decision in the case of Sandvik Asia Ltd. CCE, Ahmedabad, to support their argument.

The Tribunal, after considering the submissions, agreed with the appellant's counsel that dues from M/s. ICI (India) Ltd., being a different legal entity, should not be adjusted against the rebate sanctioned to the appellant. The Tribunal also noted that ordering the recovery of dues stayed by the Tribunal was not appropriate. Consequently, the appeal was allowed with consequential relief.

This judgment clarifies the principle that dues from one legal entity cannot be adjusted against amounts due to another entity, even if the latter exports products of the former. It emphasizes the importance of maintaining the separate legal identities of entities in matters of financial obligations and adjustments.