2019 (11) TMI 427 - AT - Central Excise

Adjustment of sanctioned refund against outstanding confirmed dues - Section 35F of Central Excise Act, 1944 and Section 35FF of Central Excise Act, 1944 - Board Circular No.802/2004, dt.08.12.2004 - whether the outstanding dues are in reality payable by the Respondent or already paid by the Respondent during the course of various proceedings as claimed by them? HELD THAT - The Adjudicating authority, while adjusting the refund claim against the outstanding dues ought to have provided an opportunity to the Respondent to make submissions in this regard. Therefore, the issue needs to be re-examined by the Adjudicating authority after affording an opportunity of hearing to the Respondent. Appeal allowed by way of remand.

Summary

Issues:
1. Adjustment of refund claim against outstanding dues.
2. Violation of principles of natural justice in adjusting refund amount.
3. Opportunity of hearing before adjusting refund amount.

Analysis:
1. The appeal was filed against the order adjusting a refund claim of ?8,71,70,994 against confirmed outstanding dues of ?223.35 Crores. The Revenue argued that the adjustment was in accordance with Section 11 of the Central Excise Act, 1944. On the other hand, the Respondent contended that they had no outstanding dues and all payments were made during various proceedings. The Adjudicating authority did not provide an opportunity for the Respondent to rebut the observations before adjusting the refund amount, leading to a violation of principles of natural justice.

2. The Revenue accepted that the Respondent was not given a hearing before the adjustment. The Tribunal considered the submissions and records, focusing on whether the refund amount should be adjusted against outstanding dues. The Tribunal cited Section 11 of the Central Excise Act, 1944, regarding the recovery of sums due to the Government. It was noted that the Adjudicating authority should have allowed the Respondent to make submissions regarding the outstanding dues before adjusting the refund amount.

3. The Tribunal found that the issue of whether the outstanding dues were actually payable by the Respondent or already settled needed to be re-examined by the Adjudicating authority. It was emphasized that the Respondent should be given an opportunity to respond to the communications relied upon by the Adjudicating authority. The matter was remanded to the Adjudicating authority to reevaluate the issue after providing the necessary opportunity for the Respondent to present their case.

Conclusion:
The appeal was allowed by way of remand to the Adjudicating authority to re-examine the issue of adjusting the refund amount against outstanding dues, ensuring that the Respondent is given a fair opportunity to present their case and respond to the communications relied upon.