2018 (4) TMI 1300 - AT - Central Excise

Rebate claim - merchant supplier - appellant herein had procured/purchased the batteries on which Central Excise duty has been discharged - applicability of Section 11 of the Central Excise Act, 1944 - Held that - It can be seen from Section 11 of the CEA 1944, the same contemplates about recovery/ adjustment/appropriation of the amounts which are due to the Government from the person against whom duty liability is confirmed and due to government - In the case in hand it is undisputed that the appellant herein is a merchant exporter and purchased batteries from M/s Union Batteries Pvt Ltd and claimed rebate of the Central Excise duty paid by Union Batteries Pvt Ltd; that there are no dues to government from the appellant herein. The amount of rebate which is sanctioned to appellant cannot be appropriated by the authorities by invoking the provisions of Section 11, more specifically when the dues are from totally a different entity M/s Union Batteries Pvt Ltd. Amount to be refunded in cash - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Rebate claim filed by the appellant and appropriation towards service tax dues of another entity.
2. Interpretation of Section 11 of the Central Excise Act, 1944 regarding recovery and appropriation of sums due to the Government.
3. Misconstruing of Section 11 by lower authorities in the context of the appellant's case.

Analysis:
1. The appellant, a merchant exporter, purchased batteries from another entity and claimed rebate of Central Excise duty paid by that entity. The authorities sanctioned the refund but appropriated it towards service tax dues of the other entity. The appellate authority upheld this decision, leading to the present appeal.

2. The appellant argued that Section 11 of the Central Excise Act, 1944, does not apply as they are a separate entity from the one with dues. Section 11 allows for recovery of sums due to the Government, but in this case, the appellant had no dues, and the rebate should not be appropriated. The section outlines procedures for recovery, including attachment and sale of goods, and requiring third parties to pay money due to the debtor.

3. The Tribunal found that the lower authorities misinterpreted Section 11, as there was no evidence of unpaid dues by the appellant to the entity with service tax dues. The appellant's claim for rebate should not have been appropriated based on Section 11. The Tribunal set aside the impugned order and directed the lower authorities to refund the amount to the appellant in cash. The appeal was allowed based on this analysis.