2017 (1) TMI 1226 - AT - Central Excise

Refund claim - recovery during pendency of appeal - Held that - reliance placed in the case of Vira Scooters vs. CCE, Ludhiana 2010 (4) TMI 564 - CESTAT NEW DELHI , where it was held that the department cannot take coercive action when the appeal is pending before the higher judicial forum. Whether the refund can be adjusted by arrears of revenue? - Held that - refund cannot be adjusted against arrears of revenue when the matter in dispute has not attained finality. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
- Appeal against rejection of refund claim and appropriation of the refunded amount against arrears of revenue
- Coercive action for recovery of interest during pendency of appeal before Tribunal

Analysis:

Issue 1: Appeal against rejection of refund claim and appropriation of the refunded amount against arrears of revenue
The appellant, a manufacturer of telecommunication equipment, filed a refund claim after finalization of provisional assessment. The Assistant Commissioner initially sanctioned a refund of Rs. 7,914 under Section 11B of the Central Excise Act, 1944, but credited the amount to the Consumer Welfare Fund. The appellant appealed this decision, and the Commissioner (A) directed the Department to refund the amount. However, in a subsequent Order-in-Original, the Assistant Commissioner appropriated the refund against arrears of revenue, leading to a further appeal by the appellant. The Commissioner (A) rejected this appeal, prompting the present appeal. The appellant argued that the Department cannot adjust refunds against disputed demands pending before appellate authorities, citing relevant legal authorities. The learned AR supported the impugned order. The Tribunal, after considering the submissions and relevant legal precedents, held that coercive action cannot be taken when an appeal is pending before a higher judicial forum, and refunds cannot be adjusted against arrears of revenue when the matter in dispute is unresolved. Consequently, the Tribunal allowed the appeal, setting aside the impugned order with any consequential relief.

Issue 2: Coercive action for recovery of interest during pendency of appeal before Tribunal
The appellant also raised a separate issue regarding coercive action taken by the Department for the recovery of interest while an appeal was pending before the Tribunal. The appellant contended that it was improper for the Department to initiate recovery action for an amount demanded towards interest that was still subjudice before the Tribunal and had not attained finality. The appellant relied on legal precedents to support this argument. The Tribunal, after considering the appellant's submissions and the legal authorities cited, agreed that coercive action should not have been taken when the appeal was pending before a higher judicial forum. The Tribunal found that the impugned order was not sustainable in law, in line with the legal principles cited by the appellant. As a result, the Tribunal allowed the appeal, setting aside the impugned order with any consequential relief.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order in both issues and providing relief to the appellant.