2014 (7) TMI 568 - AT - Central Excise

Duty demand - Tribunal Confirmed demand - Assessee filed appeal before Supreme Court - When matter was pending before Supreme Court Kar Vivad Samadhan Scheme was introduced - appellant filed a declaration in terms of section 88 of the Kar Vivad Samadhan Scheme while matter was still pending before supreme Court - amount of ₹ 10,94,130/- was also paid by them - application made under Kar Vivad Samadhan Scheme was decided by the Designated Authority directing the appellant to make a full and final settlement of their tax arrears to the extent of ₹ 29,80,762.50 - appellant did not deposited the tax so determined and also did not withdraw the petition filed by them before the Supreme Court within a period of 30 days from the date of issuance of certificate by the Designated Authority, the matter was held as settled before in terms of Kar Vivad Samadhan Scheme - Subsequently the Supreme Court decided the petition filed by the appellant in their favour and set aside the orders of the lower authorities confirming demands against them - Denial of refund claim of amounts paid by assessee. Held that - When the amount of ₹ 10,94,130/- deposited by the appellant in terms of KVSS Scheme, at the time of filing the declaration stand appropriated by the Commissioner towards confirmed demand, the same becomes a part and parcel of the demand confirmed by the Commissioner and is placed on the same platform at which the other deposits made by the assessee are placed. As such, when the appellants succeed at the Supreme Court stage, they become entitled to the refund of entire duty either directly deposited by them or appropriated by the Commissioner. As such, in my view the revenues technical objection that the provisions of Section 93 of the Finance Act, 1998, do not allow the refund of deposits made by assessee at the time of making a declaration cannot be appreciated inasmuch as by appropriating the said deposits towards the confirmed duty demand, the deposits inter alia remain deposit in terms of Section 88 of KVSS Scheme - Assessee entitled to get refund of disputed amount - Decided in favour of assessee.

Summary

Issues:
1. Refund claim under Kar Vivad Samadhan Scheme.
2. Appropriation of deposit by Commissioner.
3. Entitlement to refund of duty paid.
4. Interpretation of Section 93 of the Finance Act, 1988.
5. Denial of refund by Commissioner (Appeals).
6. Recovery of erroneously granted refund.

Refund claim under Kar Vivad Samadhan Scheme:
The appellant was engaged in manufacturing and erecting mudguns for a blast furnace. A show cause notice was issued demanding duty, which was confirmed by the Commissioner and later by the Tribunal. The appellant filed a declaration under the Kar Vivad Samadhan Scheme, paying a certain amount. The Designated Authority directed a settlement of tax arrears, but the appellant did not comply. Subsequently, the Supreme Court ruled in favor of the appellant, entitling them to a refund.

Appropriation of deposit by Commissioner:
The Deputy Commissioner verified the refund claim and noted that a part payment made under the Kar Vivad Samadhan Scheme was appropriated by the Commissioner towards the confirmed demand. The Deputy Commissioner sanctioned the total refund claim, leading to an appeal by the Revenue against the refund of a specific amount.

Entitlement to refund of duty paid:
The Supreme Court's decision in favor of the appellant entitled them to a refund, including the amount paid under the Kar Vivad Samadhan Scheme. The Commissioner (Appeals) accepted the Revenue's argument that the amount paid under the scheme was not refundable under Section 93 of the Finance Act, 1988.

Interpretation of Section 93 of the Finance Act, 1988:
Section 93 of the Finance Act, 1988 states that amounts paid under a declaration made under Section 88 are not refundable under any circumstances. The Commissioner (Appeals) upheld this provision, denying the refund of a specific amount to the appellant.

Denial of refund by Commissioner (Appeals):
The Commissioner (Appeals) accepted the Revenue's position that the amount paid under the Kar Vivad Samadhan Scheme could not be refunded, even after the appellant's dispute was settled under the scheme. This denial led to the present appeal by the appellant.

Recovery of erroneously granted refund:
The Tribunal found in favor of the appellant, stating that erroneously granted refunds must be recovered through a show cause notice under section 11A of the Central Excise Act. Citing previous judgments and circulars, the Tribunal held that the impugned order was not maintainable as no show cause notice had been issued, allowing the appeal with consequential relief to the appellant.