2018 (7) TMI 402 - AT - Central Excise

Adjustment of amount due from abatement claim / adjustment of demand with refund - Abatement of duty - Rule 10 of Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008 - Held that - There is no dispute that the appellant is entitled to claim of abatement of ₹ 37,33,333/- - Hon ble Karnataka High Court in the case of Commissioner of Central Excise, Bangalore -III Vs. Stella Rubber Works (Units)-II 2013 (3) TMI 299 - KARNATAKA HIGH COURT observed that once the Adjudicating Authority has held that the assessee is entitled to refund of the amount which was paid to the department, in absence of the specific provisions authorizing the Revenue adjusting the said amount towards due to them, it is improper for them to make such adjustment. In the present case, the Adjudicating Authority adjusted the duty by invoking Section 11 of the Act, 1944. Apparently, there is no confirmed demand against the appellant and therefore the action of the lower authorities cannot be sustained in the eye of law. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Claim for abatement of duty under Rule 10 of the Pan Masala Packing Machine Rules, 2008; Appropriation of duty deposit against abatement claim; Interpretation of Section 11 of the Central Excise Act, 1944 regarding adjustment of amounts due; Comparison with relevant legal precedents.

Analysis:

The appeal before the Appellate Tribunal CESTAT Kolkata involved a dispute regarding the abatement of duty claimed by the appellant, a manufacturer of Pan Masala. The appellant had filed a claim for abatement of duty under Rule 10 of the Pan Masala Packing Machine Rules, 2008. The Adjudicating Authority had appropriated a portion of the claimed amount against a demand and adjusted the remaining sum towards future duty liability. The Commissioner (Appeals) upheld this decision, leading to the appellant's appeal before the Tribunal.

Upon hearing both sides and examining the records, the Tribunal noted that there was no dispute regarding the appellant's entitlement to the claimed abatement amount. However, the Commissioner (Appeals) justified the withdrawal of a specific sum based on an investment-related dispute mentioned in the appellant's letter. The Tribunal referenced a judgment by the Hon'ble Karnataka High Court, emphasizing that adjustments by the revenue, under Section 11 of the Central Excise Act, 1944, should be authorized by specific provisions. The Tribunal highlighted that in the absence of such provisions, adjustments could be deemed improper.

In the context of the present case, the Adjudicating Authority had invoked Section 11 of the Act to adjust the duty, despite the absence of a confirmed demand against the appellant. The Tribunal, drawing on legal precedent, including a decision involving M/s. Dharampal Satyapal Limited, concluded that the actions of the lower authorities were not legally sustainable. The Tribunal's analysis underscored the importance of statutory provisions authorizing revenue adjustments and highlighted the necessity for legal authority in such matters.

Ultimately, the Tribunal allowed the appeal filed by the appellant, setting aside the decisions of the lower authorities. The judgment serves as a reminder of the legal principles governing the adjustment of amounts due under the Central Excise Act, emphasizing the need for specific statutory provisions to authorize such actions and ensuring compliance with established legal precedents to uphold the rule of law.