2016 (7) TMI 429 - AT - Central Excise

Adjustment of refund amount with the pending demand - when the appellant went on appeal against the appropriation order, the very same Commissioner (Appeals), with whom the demand order was appealed, has held that the appropriation is correct. - Held that - before appropriation of refund towards any arrears due, show cause notice/personal hearing is required. - appellants were not even issued a simple intimation regarding proposed appropriation - impugned order is not justifiable and set aside - The appellant is eligible for refund of full amount as originally decided by the jurisdictional Asstt. Commissioner with applicable interest , if any. - Decided in favor of assessee.

Summary

Issues:
1. Appropriation of refund against confirmed demand without notice.
2. Delay in disposal of stay/appeal by Commissioner (Appeals).
3. Coercive action of recovery without following principles of natural justice.
4. Applicability of Section 11 for recovery of sums due to the government.
5. Requirement of show cause notice/personal hearing before appropriation of refund.

Analysis:

1. The appellant filed a refund claim, which was sanctioned by the Asstt. Commissioner but later appropriated against a confirmed demand without notice. The Commissioner (Appeals) upheld this, leading to the current appeal. The appellant argued that the appropriation was unjust as there was no decision on the stay application during the appeal's pendency. The delay in disposal of the appeal was not their fault. The Tribunal found the Original Authority's actions unjust as the appeal was pending, and no coercive action was warranted during appeal pendency.

2. The delay in disposal of the stay/appeal by the Commissioner (Appeals) was highlighted by the appellant. The Tribunal noted that the appeal was decided after two years, and the appellant had already filed an appeal with the Tribunal. The Original Authority's actions were deemed unjust as no principles of natural justice were followed before coercive recovery action. The Tribunal emphasized that no coercive action could be taken during the appeal's pendency.

3. The Tribunal referenced past judgments regarding the requirement of show cause notice/personal hearing before appropriation of refund towards any arrears due. It was noted that the appellants were not informed about the proposed appropriation, which was deemed necessary. The Tribunal also discussed the applicability of Section 11 for recovery of sums due to the government, emphasizing that coercive collection could only occur after the finality of appeal proceedings.

4. After thorough analysis, the Tribunal found the impugned order unjustifiable and set it aside. The appellant was declared eligible for a full refund with applicable interest, as originally decided by the Asstt. Commissioner. The appeal was allowed accordingly, emphasizing the importance of following principles of natural justice and legal provisions in such matters.

This detailed analysis of the judgment highlights the key issues involved and the Tribunal's decision in each aspect, ensuring a comprehensive understanding of the legal proceedings.