2016 (9) TMI 887 - AT - Central Excise

Refund claim - Entitlement - Assistant Commissioner, after allowing the refund claim had adjusted the same against the outstanding dues - appellants accepted the said order of the Asstt. Commissioner and did not challenge it before any higher appellate forum - Held that - when the matter was remanded by the Tribunal in the earlier proceedings and reached the Commissioner (Appeals) in denovo proceedings, he again passed the order in favour of the assessee. That order had become final inasmuch as the same was not challenged by the Revenue before the Tribunal. As such, the appellants are admittedly entitled to the refund of duty paid but the same refund having been sanctioned and adjusted, second time refund claim by the assessee is not appropriate. The effect of the same would be that deposits made in the shortages case and refunded to the assessee in principle, would be treated as deposit towards earlier demand. As and when the earlier demand is decided, based upon the outcome of the same, the appellants entitlement to refund would be decided accordingly. - Decided against the appellant

Summary

Issues:
1. Refund claim adjustment against outstanding demand.
2. Finality of earlier refund claim adjustment.
3. Entitlement to refund of duty paid.

Analysis:
1. The appellant, engaged in manufacturing Copper ingots, faced a shortage in raw material during a Central Excise Officer's visit, resulting in a duty of around &8377; 2,44,680. The appellant deposited this duty along with a 25% penalty totaling around &8377; 3,05,850. On appeal, the Commissioner (Appeals) allowed the refund of the deposited amount. However, the original adjudicating authority appropriated this refund towards an outstanding demand of around &8377; 8 crores. The appellant did not challenge this decision before any higher forum, leading to the finality of the adjustment against the outstanding demand.

2. Subsequently, when the matter was remanded by the Tribunal in earlier proceedings and reached the Commissioner (Appeals) again, a favorable order was passed for the appellant. This order became final as the Revenue did not challenge it before the Tribunal. The appellant, although entitled to the refund of the duty paid, had already received and accepted a refund that was adjusted against the outstanding dues. Therefore, a second refund claim by the appellant was deemed inappropriate due to the finality of the earlier adjustment.

3. The appellant contended that compliance with directions from the Hon'ble Delhi High Court, involving a deposit of &8377; 1.50 crores, should have precluded the Revenue from adjusting the refund amount against the outstanding demand. However, the Revenue argued that the adjustment was made before the Tribunal and the High Court's orders. The Tribunal noted that the total deposit by the appellant in the demand case of &8377; 8 crores needed to be considered, including the amount in the present refund case. The decision on the refund, including the present case, was to be based on the outcome of the appeal related to the demand of &8377; 8 crores, currently pending before the Tribunal.

In conclusion, the Tribunal found no merits in the appeal at this stage and rejected it. The finality of the earlier refund adjustment, the lack of challenge by the appellant, and the ongoing proceedings related to the demand of &8377; 8 crores were crucial factors in determining the appellant's entitlement to the refund of duty paid.