2018 (6) TMI 1346 - AT - Central Excise

Adjustment of remand with the demands - demand was not attained finality - pendency of appeal - Held that - The adjustment by the ACCE against a demand which is subjudice before the Tribunal is not sustainable in law - the issue is squarely covered by the decision in the case of UNISULE LABORATORIES LTD. VERSUS COMMISSIONER OF C. EX., ROHTAK 2008 (6) TMI 417 - CESTAT, NEW DELHI , where it was held that where the stay has been extended till disposal of appeal, and not for a limited period, it is none of the business of the Department to insist on payment of duty etc., which is subject matter of the appeal, and any action on the part of officer will be seriously viewed by the Tribunal as an attempt to flout its order - appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against the refund sanction and adjustment by ACCE, Bangalore
- Legality of adjusting refund against pending demand
- Compliance with CESTAT Final Order No.21290/2015

Analysis:
1. The appeal was filed by the Revenue against the order passed by the Commissioner(Appeals) directing the sanction of a refund of ?1,47,24,880 in compliance with the CESTAT Final Order No.21290/2015. The respondent, engaged in manufacturing telecommunication equipment, had filed a refund claim consequent to finalizing provisional assessments during the financial years 2003-04 to 2006-07. The ACCE, Bangalore, initially sanctioned the refund but later adjusted it against a confirmed demand, leading to further appeals and orders.

2. The Revenue contended that the adjustment made by the ACCE was appropriate, citing a Tribunal decision involving Tisco Ltd. vs. CCE, Hyderabad. On the other hand, the respondent argued that the refund was not sanctioned despite strictures passed against the ACCE. The respondent further highlighted that the appeal against the demand in question was pending before the Tribunal, relying on legal precedents like Vira Scooters vs. CCE, Ludhiana and Unisule Laboratories Ltd. vs. CCE, Rohtak, to support their stance.

3. After hearing both parties and examining the records and legal precedents cited, the Tribunal concluded that adjusting the refund against a demand under dispute before the Tribunal was not legally sustainable. The Tribunal found merit in the respondent's argument, supported by the legal decisions referenced, and dismissed the Revenue's appeal. The Tribunal's decision was based on the principle that adjustments against pending demands lacking finality are not permissible in law, in line with established legal precedents.

4. The Tribunal's ruling, delivered on 07/06/2018, emphasized the importance of legal compliance and adherence to established principles in matters concerning refunds and adjustments. By upholding the respondent's position and dismissing the Revenue's appeal, the Tribunal reaffirmed the legal principle that adjustments against demands under appeal are not permissible until a final decision is reached by the appropriate judicial authority.