2022 (4) TMI 1103 - AT - Central Excise

Re-credit - Restoration of amount in CENVAT credit account from where the payment of duty was made - Appellant was not liable to pay duty on the finished goods for export - N/N. 30/2004-CE dated 09/07/2004 - HELD THAT - Admittedly the dispute with regard to rebate totalling 59, 16, 907 was sub judice before the Hon ble Rajasthan High Court on the date of adjustment vide orders-in-original dated 28.01.2013. The said order is patently illegal and in violation of the instructions of the Board s Circular No.13/92-CX-6 dated 4.11.1992. Further it is found that this Tribunal in its precedent judgement in the case of Voltas Ltd. Vs. CCE 2006 (5) TMI 232 - CESTAT BANGALORE has held that Section 11 can be invoked only when the demand proposed to be adjusted have reached finality. As the dispute relating to rebate for the amount of 59, 16, 907/- has been subjudice before one appellate forum or the other and passing of the adjudication orders and appellate orders pursuant to protective show cause notices 12.01.2010 is ab-initio void in the eyes of law. Such adjudication and appellate orders are declared to be nonest under law. The Adjudicating Authority is directed to disburse the sanctioned rebate amount of 85, 38, 790/- with interest under Section 11 BB of the Act within a period of 30 days from the date of receipt of copy of this order - Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Whether the adjudicating authority can adjust refund/rebate claim sanctioned against Government dues.

Analysis:
1. Rebate Claims for Exported Goods (May and June 2008):
The Appellant, engaged in manufacturing and exporting cotton yarn and manmade yarn, filed 15 rebate claims under Rule 18 of the Central Excise Rules for goods exported in May and June 2008. The duty on exported goods was paid from the Cenvat credit account. The Assistant Commissioner rejected the rebate claims but allowed the Appellant to restore the amount in their Cenvat credit account, as they were not liable to pay duty on exported goods. The Revenue contended that allowing re-credit was akin to a refund, which required an application from the assessee. The Commissioner (Appeals) upheld the rejection of re-credit, leading to subsequent legal actions.

2. Legal Proceedings and Show-Cause Notices:
The Appellant filed a writ petition before the Rajasthan High Court, which issued a notice to the Revenue. Meanwhile, the Revenue issued 15 show-cause notices for a demand totaling ?59,16,907. Despite the matter being sub-judice, the Assistant Commissioner confirmed the demand through an ex-parte order. The Commissioner (Appeals) rejected the Appellant's appeals, but the Rajasthan High Court had granted an interim stay on the demand.

3. Further Rebate Claims (September to November 2012):
Subsequently, the Appellant filed rebate claims totaling ?85,38,790 for the period of September to November 2012. The adjudicating authority adjusted this amount against the sub-judice demand from 2008 and interest, totaling ?95,28,814. The Commissioner (Appeals) upheld this adjustment, citing Section 11 of the Act, allowing deduction from any money owed to the Appellant.

4. Tribunal's Decision and Legal Precedents:
The Appellant challenged the adjustment before the Tribunal, arguing that no recovery under Section 11 should be made while sanctioning a rebate claim. The Tribunal found the adjustment illegal, citing a precedent where Section 11 could only be invoked when the demand reached finality. The Tribunal declared the adjudication and appellate orders related to the protective show-cause notices as void and allowed the appeals, directing the disbursement of the sanctioned rebate amount with interest.

In conclusion, the Tribunal ruled in favor of the Appellant, highlighting the illegality of adjusting the rebate against sub-judice demands and emphasizing the need for finality before invoking Section 11. The Appellant was granted relief, and the Adjudicating Authority was directed to disburse the sanctioned rebate amount within a specified timeframe.