2007 (11) TMI 366 - HC - Central Excise

Refund of amount deposited by the assessee during the course of investigations Non challenge to appropriation order - Deputy Commissioner passed an order to appropriate the said amount alleging undervaluation of excisable goods sold through depots - This order was not questioned by the assessee. The assessee has also paid a sum of Rs. 1,000/- which was imposed as penalty. In other words, the order of Deputy Commissioner, Central Excise, Bellary, has become final and conclusive. Refund application for said amount filed on ground of adjudication of duty payable - Even if we accept the contention raised by the learned Counsel for the assessee that there was no adjudication of the duty payable by the original authority, when the original authority has passed an order to appropriate the amount of Rs. 9,70,524/- and imposed a penalty of Rs. 1,000/-, it was for the assessee to challenge the order of appropriation. - Revenue is justified in contending that the refund claim of the assessee was not maintainable. Therefore, we are of the opinion that the Tribunal was not justified in allowing the appeal of the assessee in directing the Revenue to refund the amount which was already appropriated in the original proceedings.

Summary

Issues:
1. Whether the amount deposited by the assessee was under protest or voluntary?
2. Can the Tribunal set aside the order passed by the Commissioner of Customs and the Adjudicating Authority on a refund claim when the amount was appropriated by the original authority while imposing a penalty?

Analysis:

Issue 1:
The case involved a dispute regarding the refund of an amount deposited by the assessee during an investigation. The Deputy Commissioner imposed a penalty and appropriated the deposited amount, which the assessee did not challenge. The assessee later sought a refund, claiming the amount was paid under protest. The Tribunal allowed the refund claim, stating there was no show cause notice or adjudication on the duty payable. However, the High Court held that since the appropriation order was not challenged by the assessee, it became final and conclusive. The Court emphasized that even if there was no adjudication of duty payable, the assessee should have challenged the appropriation order. Therefore, the Court ruled in favor of the Revenue, stating the refund claim was not maintainable.

Issue 2:
The second issue raised was whether the Tribunal had the authority to set aside the order passed by the Commissioner of Customs and the Adjudicating Authority on a refund claim when the amount had already been appropriated. The High Court opined that as long as the order of appropriation was not challenged and set aside, the Tribunal was not justified in directing the Revenue to refund the amount. The Court held that the Tribunal erred in allowing the appeal of the assessee and confirmed the orders passed by the Assistant Commissioner of Central Excise and the Commissioner of Central Excise (Appeals). Consequently, the High Court allowed the appeal, setting aside the Tribunal's order and upholding the decisions of the lower authorities.

In conclusion, the High Court ruled in favor of the Revenue, emphasizing the importance of challenging appropriation orders and maintaining the finality of such decisions. The Court's decision highlighted the need for parties to adhere to procedural requirements and challenge adverse orders promptly to seek appropriate remedies within the legal framework.