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2019 (1) TMI 369 - AT - Central ExciseAdjustment of refund sanctioned towards the pending arrears in terms of Section 11 of the Central Excise Act, 1944 - liability of interest towards the delayed refund - relevant time for calculation of interest - Held that - There were no arrears which are due to the Government, as the Order-in-Original which confirmed the demands raised against which the refund claims was adjusted towards arrears, was in appeal and appeal was held in favour of the appellant - The issue is no more res integra as Hon ble High Court of Karnataka in the case of CCE, Bangalore-III Vs. Stella Rubber Works (Unit II) 2013 (3) TMI 299 - KARNATAKA HIGH COURT has categorically recorded that amounts cannot be appropriated towards the Revenue dues unless the provisions are followed - demand set aside. Interest on delayed refund - Held that - Nothing is recorded in the Tribunal s order as to why and when in appeal No. E/926/2008 came to be restored and disposed of on 14.07.2016. Be that as it may, the appellant s claim for the interest, if any, could arise only after the three months from date of the disposal of appeal vide which, demands has been held as unsustainable held in their favour. Appeal disposed off.
Issues Involved:
1. Adjustment of refund sanctioned amount towards pending arrears. 2. Entitlement to interest on delayed refund and the commencement date for such interest. Detailed Analysis: 1. Adjustment of Refund Sanctioned Amount Towards Pending Arrears: The core issue revolves around whether the refund amount sanctioned to the appellant can be adjusted towards pending arrears as per Section 11 of the Central Excise Act, 1944. The appellant contested the adjustment of ?35,52,510/- towards arrears, arguing that there were no confirmed arrears due to the government since the Order-in-Original confirming the demands was under appeal and had been decided in favor of the appellant. The Tribunal found merit in the appellant's submission, noting that the issue on merits was resolved in favor of the appellant, and thus, no dues were pending. Both lower authorities erred in adjusting the refund amount towards arrears, and if not already refunded, the amount should be refunded forthwith. This conclusion aligns with the precedent set by the Hon'ble High Court of Karnataka in CCE, Bangalore-III Vs. Stella Rubber Works (Unit –II) [2012 (275) ELT 404 (Kar.)], which held that amounts cannot be appropriated towards revenue dues unless the provisions are followed. 2. Entitlement to Interest on Delayed Refund and Commencement Date: The appellant sought interest on the delayed refund of ?85,52,110/-, arguing that interest should accrue from October 2000, three months after the first order of the Adjudicating Authority was set aside and the matter was remanded. The Tribunal examined the timeline of the case, noting that the appeal No. E/926/2008 was initially allowed by the Tribunal on 03.12.2009, but was later heard and disposed of again on 14.07.2016. The Tribunal concluded that the interest claim could only arise three months after the final disposal of the appeal, which was on 14.07.2016. Therefore, if the pre-deposit amount was not returned within three months from that date, interest liability would arise, and the appellant would be entitled to such interest. This decision was supported by Board Circular Nos. 802/35/2004-CX., dated 8-12-2004 & F. No. 275/37/2K-CX. 8A, dated 2-1-2002, which stipulate that pre-deposits should be returned to the appellant after the disposal of the order in their favor. Conclusion: The Tribunal set aside the lower authorities' orders to the extent they adjusted the refund amount towards arrears and directed that the amount be refunded if not already done. Regarding interest on the delayed refund, the Tribunal held that interest would be payable three months after the final disposal of the appeal on 14.07.2016, if the pre-deposit amount was not refunded within that period. The appeal was disposed of in line with these findings. (Order pronounced on 02/01/2019 in open court)
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