2010 (1) TMI 407 - AT - Central Excise

Refund of pre-deposit- The appellants are engaged in manufacture of oxygen and dissolved acetylene gases falling under Chapter heading 28 & 29 of the Central Excise Tariff Act, 1985. The appellants had collected transportation charges from their buyers in addition to price indicated in their invoices but had not included the same in the transaction value for the purpose of computation of excise duty and, therefore, they were accused of short payment of duty and the same was demanded under show cause notices which came to be confirmed pursuant to the adjudication proceedings. Being aggrieved, the appellants had filed appeal along with application for stay to dispense with the requirement of pre-deposit of duty and penalty. Under the stay order, the appellants were directed to deposit an amount of Rs. 2,50,000/- The appeal before the Commissioner (Appeals), was ultimately allowed in favour of the appellants. Under letter, the appellants intimated that the deposit of Rs. 2,50,000/- made through TR challan could be utilized by crediting in PLA in entry No. 18 dated 22-9-2005. now the allegation of next show cause notice is that the appellants had suo motu taken credit of Rs. 2,50,000/- without prior sanction from competent authority. Held that- non- compliance of obligation by assessee established. Such action by department justified.

Issues Involved:
1. Liability to pay interest for unilateral credit utilization.
2. Forfeiture of facility to pay duty in monthly installments.
3. Inclusion of transportation charges in transaction value for excise duty computation.
4. Refund of pre-deposit upon successful appeal.
5. Adjustment of refundable amount against outstanding dues.

Detailed Analysis:

1. Liability to Pay Interest for Unilateral Credit Utilization:
The appellants were held liable to pay interest amounting to Rs. 5788/- for having utilized the credit unilaterally and without prior sanction. The Assistant Commissioner directed that this amount, along with an additional Rs. 3859/- due to the Revenue, be deducted from the refundable amount of Rs. 2,50,000/-. The appellants contested this, arguing that the amount was a pre-deposit and should be refunded unconditionally. However, the Tribunal confirmed the findings of the lower authorities, noting that the appellants had taken credit suo motu without waiting for necessary sanction.

2. Forfeiture of Facility to Pay Duty in Monthly Installments:
The Commissioner (Appeals) modified the Assistant Commissioner's order, forfeiting the facility extended to the appellants to pay duty in monthly installments under Rule 8(3A) for a period of two months. The appellants were directed to pay duty on each consignment of goods from their current account, and a penalty of Rs. 10,000/- was imposed under Rule 25 of the Central Excise Rules, 2002. The Tribunal upheld this modification, citing the appellants' default in duty payment by the due date and the erroneous availment of credit.

3. Inclusion of Transportation Charges in Transaction Value:
The appellants collected transportation charges from their buyers but did not include these in the transaction value for excise duty computation, leading to a short payment of duty amounting to Rs. 5,99,735/-. The demand for this amount was confirmed through adjudication proceedings. The Tribunal noted this issue but primarily focused on the procedural aspects of credit utilization and refund.

4. Refund of Pre-Deposit Upon Successful Appeal:
The appellants argued that the pre-deposit of Rs. 2,50,000/- made in compliance with a stay order should be refunded unconditionally upon succeeding in the appeal. The Tribunal acknowledged that pre-deposit amounts are generally refundable upon successful appeal. However, it also noted that the appellants availed the credit suo motu without proper sanction, which complicated the matter.

5. Adjustment of Refundable Amount Against Outstanding Dues:
The Tribunal confirmed that the Department was justified in adjusting the refundable amount against the outstanding dues of Rs. 3859/-. Section 11 of the Central Excise Act, 1944, empowers the Department to adjust refundable amounts towards dues from the party. The Tribunal found no fault with the lower authorities' decision to appropriate Rs. 5788/- and Rs. 3859/- from the refundable amount of Rs. 2,50,000/-.

Conclusion:
The Tribunal upheld the findings of the lower authorities, confirming the liability to pay interest for unilateral credit utilization, the forfeiture of the facility to pay duty in monthly installments, and the adjustment of the refundable amount against outstanding dues. The appeals were dismissed, and no interference was deemed necessary in the impugned orders.

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