2016 (9) TMI 126 - AT - Central Excise

Refund / Rebate - Whether appropriation of rebate sanctioned in cash against the custom duty arrears in terms of Section 142(1) of the Customs Act 1962 is in order - As per Revenue, the appropriation is permitted in accordance with law whereas as per the appellants the appropriation of rebate of refund cannot be done against the customs duty arrears by invoking Section 142 of the Customs Act - Held that - it is found that all the orders against which appropriation is made have been challenged by the appellant before this Tribunal and the stay has been granted by this Tribunal and they are pending for final disposal and the demand has not attained finality. Further it is a settled position of law as held in the various cases that the appropriation of refund amount towards duty demand pending in other cases which has not attained finality is not legal and proper. Therefore, the appropriation of refund claim against disputed pending custom appeals is not sustainable in law as the demands in those cases have not reached finality. - Decided in favour of appellant

Summary

Issues:
Appropriation of rebate against custom arrears under Section 142 of the Customs Act.

Analysis:
The appeals were filed against orders-in-appeal upholding the appropriation of rebate granted against duty for the payment of custom arrears under Section 142 of the Customs Act. The appellants contended that such appropriation is impermissible when the demand has not attained finality. They argued that Section 11 of the Central Excise Act is applicable only when the demand is final, and until then, it cannot be termed as arrears for adjustment against refunds. The appellants cited legal precedents to support their argument, emphasizing that appropriation against pending demands is not legally valid. They also highlighted that the demands for custom duty arrears had not reached finality as the appeals were pending before the Tribunal, and recovery against them was not authorized.

The Tribunal examined the core issue of whether the appropriation of rebate against custom duty arrears was lawful. It was noted that all orders subject to appropriation had been challenged before the Tribunal, with stays granted pending final disposal, indicating that the demands had not attained finality. Relying on legal precedents, the Tribunal concurred that appropriation of refund against pending duty demands lacking finality was not legally permissible. The Tribunal emphasized that the appropriation of refund against disputed custom appeals not yet finalized was unsustainable in law. Consequently, the impugned order was set aside, and the appeals were allowed with any consequential relief.

In conclusion, the Tribunal ruled that the appropriation of rebate against custom duty arrears under Section 142 of the Customs Act was not valid when the demands were pending final disposal and had not reached finality. The decision was based on the principle that appropriation against unsettled demands lacking finality was legally unsustainable, as established by legal precedents. The Tribunal's judgment provided relief to the appellants by setting aside the impugned order and disallowing the appropriation of refund against pending custom appeals.