2024 (1) TMI 385 - AT - Central Excise

Appropriation of sanctioned refund - HELD THAT - The issue has been set aside by the Delhi Bench of Tribunal in COMPUTER SCIENCES CORPORATION INDIA PVT LTD. VERSUS COMMISSIONER OF SERVICE TAX, NOIDA 2014 (4) TMI 252 - CESTAT NEW DELHI where it was held that As the assessed liability of the petitioner under the adjudication order has thus suffered a plenary eclipse, the petitioner would entitled to refund. In case of M/S. PEPSICO INDIA HOLDINGS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-II (VICE-VERSA) 2019 (5) TMI 1341 - CESTAT CHANDIGARH , Chandigarh bench held the demand itself has been set aside by this Tribunal, therefore, the order of appropriation is not sustainable and the same is set aside. The appeal filed by the Revenue is dismissed.

Summary

Issues:
The issues involved in this case are the appropriation of sanctioned refund claim, the challenge against the impugned order, and the legal principles regarding the adjustment of refund against dues recoverable by the government.

Appropriation of Sanctioned Refund Claim:
The appeal filed by the Revenue contested the Order-in-Appeal that set aside the appropriation of a sanctioned refund claim of Rs.2,33,54,306/-. The Revenue relied on the decision in the case of CCE, Delhi-2 vs. Day & Company to argue that there is no legal bar on adjusting a refund against dues recoverable under the Central Excise Act, 1944. The crucial events leading to the appropriation were listed, including the confirmation of demands and the subsequent filing of a refund claim by the respondent. The Tribunal noted that previous orders confirming demands had been set aside, rendering the appeal infructuous. Citing precedents such as Pepsico India Holdings Pvt. Ltd. and Kisan Irrigations & Infrastructure Ltd., the Tribunal emphasized the need for adherence to principles of natural justice before appropriating refunds towards arrears due. The Tribunal concluded that the appeal challenging the appropriation of the refund claim against pending customs appeals was not sustainable in law, leading to the dismissal of the Revenue's appeal.

Challenge Against Impugned Order:
The Revenue challenged the Order-in-Appeal that set aside the appropriation of a sanctioned refund claim of Rs.2,33,54,306/-. The Revenue argued that the Adjudicating Authority had not followed any arbitrary process of law by adjusting the refund against confirmed demands. The Tribunal considered submissions from both parties and reviewed the impugned order along with the relevant events leading to the appropriation. Noting that previous orders confirming demands had been set aside, the Tribunal found the appeal to be infructuous and in need of dismissal. The Tribunal referred to legal precedents highlighting the importance of natural justice in appropriation cases and emphasized the need for finality in appeal proceedings before dues can be collected coercively.

Legal Principles Regarding Adjustment of Refund:
The Tribunal referred to legal precedents such as Pepsico India Holdings Pvt. Ltd., Kisan Irrigations & Infrastructure Ltd, ABB Ltd, and others to underscore the importance of following principles of natural justice before appropriating refunds towards arrears due. The Tribunal highlighted the necessity of issuing show cause notices and providing personal hearings before making any appropriation decisions. Additionally, the Tribunal emphasized that dues only become arrears after the finality of appeal proceedings. The Tribunal concluded that the appropriation of refund amounts against pending customs appeals that had not reached finality was not legally sustainable, leading to the dismissal of the Revenue's appeal.