2018 (8) TMI 462 - AT - Central Excise

Rebate claim sanctioned, was appropriated against the confirmed demand - appellant was not put to notice regarding this - principles of Natural Justice - Held that - It is observed from the original order that though the adjudicating authority has sanctioned the rebate but suo moto appropriated the same against the demand confirmed in some other case. The appellant was not put to notice regarding this appropriation, therefore, there is a gross violation of principles of nature justice. The matter remanded to the adjudicating authority for passing fresh order particularly on appropriation after affording an opportunity to the appellant of being heard - appeal allowed by way of remand.

Summary

Issues involved:
1. Appropriation of rebate claim against confirmed demand.
2. Validity of appropriation without notice and violation of principles of natural justice.

Analysis:
1. The appellant's grievance in this case revolves around the appropriation of the sanctioned rebate claim against a confirmed demand without providing any opportunity to explain the situation. The appellant's counsel argued that after paying 7.5% from the Cenvat account, an automatic stay should have been in place as per a Board Circular, preventing further recovery by the department. The Ld. Commissioner (Appeals) did not accept the 7.5% payment, leading to a Special Civil Application filed before the Gujarat High Court. The appellant contended that both the adjudicating authority and the Commissioner (Appeals) violated the principles of natural justice by not allowing the appellant to clarify the situation before making the appropriation decision.

2. On the other hand, the Ld. Deputy Commissioner representing the Revenue supported the impugned order, asserting that the appropriation was justified due to the clear dues from the confirmed demand at the time of refund sanctioning. Referring to Section 11 of the Central Excise Act, 1944, it was argued that the adjudicating authority had the legal power to appropriate the amount. However, the Member (Judicial) focused solely on the principle of natural justice in the decision. The judgment highlighted that while the rebate was sanctioned, it was unilaterally appropriated against a different demand without notifying the appellant. This unilateral action was deemed a significant violation of natural justice principles, leading to the impugned order being set aside, and the matter remanded to the adjudicating authority for a fresh decision after affording the appellant an opportunity to be heard.

This detailed analysis encapsulates the core issues of appropriation and violation of natural justice addressed in the judgment delivered by the Appellate Tribunal CESTAT AHMEDABAD.