2007 (2) TMI 231 - HC - Central Excise

Summary

Issues:
1. Appropriation of bank guarantee by the Department.
2. Refund claim by the respondent.
3. Interpretation of the K.V.S.S. Scheme.
4. Jurisdiction of the Tribunal regarding the appropriation of the bank guarantee.
5. Dispute over the substantial question of law raised by the Revenue.
6. Validity of the Tribunal's decision on the appropriation of the bank guarantee.

Detailed Analysis:
1. The respondent, a manufacturer of LPG cylinders, had its goods seized by the Department, leading to the Assistant Commissioner holding the goods liable for confiscation. The Commissioner appropriated the bank guarantee and imposed a penalty under the Central Excise Rules. The respondent opted for the K.V.S.S. Scheme and paid a fine. A claim for refund of the bank guarantee was later filed by the respondent.

2. The first instance authority rejected the refund claim, stating that the bank guarantee was appropriated in the original order, which was not appealed by the respondent. The Assistant Commissioner observed that the K.V.S.S. Scheme did not cover the amount appropriated before the scheme was opted for by the respondent.

3. The Commissioner (Appeals) Customs & Central Excise, Bhopal, reviewed the case and opined that the K.V.S.S. Scheme covered the entire order-in-original and that the appropriation of the bank guarantee was incorrect. The Commissioner (Appeals) directed the refund of the amount.

4. The Revenue appealed to the Customs, Excise & Service Tax Appellate Tribunal in New Delhi, challenging the refund decision. The Tribunal found that the appropriation of the bank guarantee was not in accordance with the law as the amount was not quantified for redemption fine, allowing for settlement under the K.V.S.S. Scheme.

5. The Revenue raised a substantial question of law regarding the Tribunal's decision on the appropriation of the bank guarantee. However, the High Court found that the Tribunal's decision was correct as the unquantified sum and the settlement under the K.V.S.S. Scheme were crucial factors in the case.

6. The High Court upheld the Tribunal's decision, stating that the bank guarantee appropriation without quantification was against the principles of adjudication and encashment. The withdrawal of the appeal did not impact the consideration of the K.V.S.S. Scheme, leading to the dismissal of the appeal by the High Court.