2022 (9) TMI 7 - AT - Service Tax

Refund of mandatory pre-deposit in terms of Section 35 F of Central Excise Act 1944 - Adjustment with with confirmed demand of duty - period of three months from the date of the order of the final authority/ CESTAT - time limitation - Circular No.984/08/2014-CX dated 16.09.2014 - HELD THAT - The perusal of these Departmental clarifications and directions, are sufficient to hold that it was a mandate upon the Department to sanction the refund of amount as was deposited under Section 35F of Central Excise Act. The adjudicating authorities are held to have committed an error while adjusting the said amount to a confirmed duty demand. The Board circular No.984/08/2014 dated 16.09.2014 though has been relied upon, present being a case of partial confirmation of demand. The bare perusal makes it clear that even the Circular No.984/08/2014 does not speak about setting off the amount of pre-deposit as made under section 35 F against any partial confirmation of demand - the refund claim irrespective of a confirmation of duty liability has wrongly been rejected. Appellant is entitled for the refund of the amount of pre-deposit thereof alongwith the interest at the applicable rate from the date of deposit till the date of realisation - Appeal allowed.

Summary

Issues:
1. Entitlement to refund of pre-deposit amount after appeal disposal before CESTAT.
2. Applicability of Circulars on refund of pre-deposits and adjustments against confirmed duty demand.

Issue 1: Entitlement to refund of pre-deposit amount after appeal disposal before CESTAT

The appellant filed an appeal challenging the order rejecting the refund claim for an amount of Rs.4,63,934. The appellant argued that the issue of refund of pre-deposit post-appeal disposal is a separate proceeding from the duty demand. The Commissioner (Appeals) upheld the order of appropriation of the refund amount against the confirmed duty demand. The appellant cited Circulars emphasizing the refund mandate under Section 35 F of the Central Excise Act within three months of the final authority's order. The appellant sought the rejection of the order under challenge and the allowance of the appeal.

Issue 2: Applicability of Circulars on refund of pre-deposits and adjustments against confirmed duty demand

The Departmental Representative (D.R.) defended the Commissioner (Appeals)'s findings, citing Circular No.984/08/2014-CX allowing adjustments from deposits in case of partial demand confirmation. The D.R. requested the dismissal of the appeal. The judgment highlighted the entitlement of the appellant to the refund of the pre-deposit amount deposited under Section 35 F of the Central Excise Act. The judgment referenced Circulars emphasizing the refund entitlement upon appeal success and the interest accrual on the refunded amount. The judgment noted errors in adjusting the pre-deposit against a confirmed duty demand, as Circular No.984/08/2014 does not permit such set-offs. Consequently, the refund claim was wrongly rejected, and the appellant was entitled to the refund along with applicable interest. The Department could recover the partially confirmed demand separately.

In conclusion, the judgment allowed the appeal, emphasizing the appellant's entitlement to the refund of the pre-deposit amount along with interest. The judgment highlighted the errors in adjusting the pre-deposit against the confirmed duty demand and referenced relevant Circulars to support the appellant's refund claim. The Department was permitted to recover the partially confirmed demand separately.