2015 (10) TMI 40 - AT - Central Excise

Rebate / Refund claim - Deduction / adjustment of interest amount with the refund - Held that - Department while sanctioning rebate claim in respect of exports to the appellant has adjusted an amount of ₹ 8,08,190/- on the ground that this amount represents the interest under Section 11AB on the differential duty paid by the appellant under Section 11A(2B) on the differential amount received by them on account of retrospective price variation. Under Section 11 of the Central Excise Act, 1944, in respect of duty and any other sums of any kind payable to the Central Government under any provision of this Act or the Rules made thereunder, the officer empowered by the Board to levy such duty or require the payment of such sum, may deduct the amount so payable from any money belong to the person from whom such sums may be recoverable. Thus for invoking Section 11, there must be some amount which is recoverable from an assessee and if this amount is not being paid, the same can be adjusted from any amount payable to the assessee. But it goes without saying that if according to the Department, any amount is recoverable from the assessee, the assessee has to be intimated about the same. - Even if the interest amount of ₹ 8,08,190/- was recoverable from the appellant, the appellant should at least have been intimated about the same, but from the records it appears there was no such intimation to the appellant. In view of this, the impugned order is not sustainable. The same is set aside - Decided in favour of assessee.

Summary

Issues:
1. Adjustment of interest amount from rebate claim under Section 11AB of Central Excise Act, 1944 without intimation to the appellant.

Analysis:
The appellant, a manufacturer of galvanized transmission tower parts, filed export rebate claims amounting to Rs. 35,24,413 for exports made by them. The Jurisdictional Assistant Commissioner sanctioned a rebate claim of Rs. 34,06,315 but deducted an interest amount of Rs. 8,08,190 from the rebate claim without prior intimation to the appellant. The appellant appealed against this decision to the Commissioner (Appeals) who upheld the deduction. The appellant then approached the Appellate Tribunal challenging the order-in-appeal.

During the hearing, the appellant's counsel argued that the adjustment of interest amount from the rebate claim was incorrect as the appellant was never intimated about the interest liability under Section 11AB of the Central Excise Act, 1944. The counsel also cited a previous judgment of the Tribunal in the appellant's own case where a similar adjustment was set aside due to lack of confirmed dues against the appellant. On the other hand, the Jt. CDR defended the impugned order, stating that interest liability on duty paid on differential amounts received due to price variation is automatic under Section 11A(2B) and Section 11AB, as per the Supreme Court judgment in CCE v. SKF India Ltd.

After considering the submissions, the Tribunal noted that while Section 11 allows for adjustment of recoverable amounts from refunds or rebates payable to an assessee, the appellant must be intimated about any recoverable amount before adjustment. In this case, there was no evidence of intimation to the appellant regarding the interest amount. Therefore, the Tribunal held that the impugned order was not sustainable. The matter was remanded to the original Adjudicating Authority for a fresh decision, emphasizing that the appellant must be given an opportunity to be heard on the interest amount before any adjustment is made. The appeal was disposed of accordingly.