2006 (3) TMI 41 - AT - Central Excise

Central Excise No amount can be appropriated unless there is a demand Any amount deposited for subsequent liability in the course of dispute can not be appropriated for previous demand

Summary

Issues: Revenue's application for rectification of mistake in the Final Order

In this case, the Revenue filed an application under Section 35C (2) of the Central Excise Act, 1944 seeking rectification of mistakes in the Final Order issued by the CESTAT. The Revenue contended that the CESTAT had erred in granting relief to the Party by setting aside a demand amount and providing consequential relief in terms of interest and penalty reduction. The mistakes alleged by the Revenue were related to the demand amount, benefit granted to the Party, and the computation of the demand.

The first issue raised by the Revenue was regarding the demand amount of Rs. 1,28,623/-. The Revenue claimed that the CESTAT wrongly observed that this amount had been demanded by the original authority but had actually been appropriated. However, upon thorough examination of the records, the CESTAT clarified that the demand had indeed been confirmed and appropriated by the adjudicating authority. The distinction between demand and appropriation was highlighted, emphasizing that the CESTAT's observation was not incorrect.

The second issue involved the component of Rs. 56,548/- in the total demand amount. The Party had made monthly payments totaling this amount for a period subsequent to the disputed period. The CESTAT accepted the Party's argument that these payments were not related to the disputed period and should not have been appropriated by the Adjudicating Authority. Therefore, the CESTAT did not grant any refund but acknowledged that the Party had fulfilled its duty liability for the subsequent period, which was not under dispute.

The third issue pertained to the amount of Rs. 75,025/-, which the Revenue claimed had been paid by the Party and should not be subject to further demand. The CESTAT agreed with the Party's evidence showing the payment of this amount on a specific date, thereby rejecting the Revenue's contention that the benefit granted was based on a misunderstanding. The CESTAT emphasized that demanding a sum already paid would amount to double taxation, and hence, upheld the benefit given to the Party.

In conclusion, the CESTAT dismissed the Revenue's application for rectification of mistakes, as it found no errors in its original Final Order. The judgment highlighted the importance of distinguishing between demand and appropriation, ensuring that payments made for periods outside the dispute are not wrongly appropriated, and preventing double taxation by recognizing payments already made by the Party.