2017 (10) TMI 75 - AT - Central Excise

Ajustment of refund claim against the interest amount outstanding - no SCN issued - Held that - the impugned order adjusting the sanctioned refund claim is required to be set aside and the matter is required to be remanded for verification of facts as well as the fact as to whether any interest proceedings stands initiated by the adjudicating authority pending against the assessee - appeal allowed by way of remand.

Summary

Issues: Refund adjustment against interest liability, confirmation of interest demand, adjustment against confirmed demand, necessity of show cause notice for interest confirmation

The judgment by the Appellate Tribunal CESTAT CHANDIGARH involved the issue of refund adjustment against interest liability. The appellant sought a refund which was partially adjusted by the Revenue against an outstanding interest amount claimed to be owed by the appellant. The appellant contended that there were no interest proceedings initiated against them, and the adjustment was made without proper adjudication. The appellant cited precedents emphasizing the need for confirmation of interest demand through a proper adjudication process and the issuance of a show cause notice within the limitation period. The Tribunal directed a re-verification of facts to determine if any interest proceedings were pending against the appellant and to reconsider the adjustment against the confirmed demand, which had been set aside by the Tribunal in a previous order.

The judgment also addressed the necessity of a show cause notice for the confirmation of interest demand. The appellant argued that the adjustment of the refund against the interest amount was an ex-parte decision by the adjudicating authority without proper adjudication proceedings. The appellant highlighted previous decisions emphasizing the requirement for confirmation of interest demand through a show cause notice within the prescribed limitation period. The Tribunal agreed with the appellant's contention and directed the adjudicating authority to consider relevant legal precedents in re-deciding the matter.

Furthermore, the judgment discussed the adjustment of the refund against a confirmed demand that had been subsequently set aside by the Tribunal. The appellant argued that since the demand against which the refund was adjusted had been dropped by a higher authority, the adjustment was no longer justifiable. The Tribunal acknowledged this argument and directed a reevaluation of the quantum of refund adjusted against the demand that had been set aside, emphasizing the need for a proper reconsideration of the adjustment.

In conclusion, the Tribunal allowed the appeal by way of remand, emphasizing the importance of verifying the existence of any pending interest proceedings against the appellant and reevaluating the adjustment made against the confirmed demand that had been set aside in a previous order. The judgment underscored the necessity of adhering to legal principles and precedents in determining the validity of refund adjustments and the confirmation of interest demands.