2024 (11) TMI 984 - AT - Central Excise

Rejection of refund claim over and above the value addition - appropriation of pre-deposit made - HELD THAT - The appellant has filed the refund claim of the pre-deposit along with interest on the basis of CESTAT Final Orders dated 23.03.2018 and 28.08.2018 but the Assistant Commissioner vide two Order-in-Original 512 and 514 sanctioned the refund along with interest but appropriated the said refund of Rs. 15,00,000/- and Rs. 32,77,590/- against the total demand of Rs.2,17,35,588/- on account of value addition confirmed for the period February 2012 to April 2012. It is found that when the appeal against the Order-in-Original was pending before the Commissioner (Appeals), the appellant Voluntarily deposited the demand against all three OIOs relating to February 2012 to April 2012 and intimated the jurisdictional Deputy commissioner Jammu vide letters dated 14.08.21 duly acknowledged on 26.08.2021 and the copies of challans have also been produced showing the payment of the entire demand of Rs. 2,17,35,588/-. Further, it is found that the appellant has voluntarily deposited the entire demand amount and informed the Department but the Department did not acknowledge the same in spite of challans showing payments being attached. Since, the appellant has voluntarily made the complete payment thereafter appropriation of the pre-deposit amount of refund sanctioned against the said demand is not legally sustainable - further it is found that the appellant specifically intimated to the department regarding the payment of the entire amount of Rs. 2,17,35,588/- and also produced the challans but in spite of that the Ld. Commissioner has upheld the Order-in-Original, appropriating the refund claim against the demand which has already been paid, when the department has collected the entire demand confirmed by the various orders thereafter, the Department is not justified to retain the sanctioned refund and appropriated the same. The both impugned order dated 08.12.2022 are not sustainable in law and is set aside - appeal allowed.

Summary

Issues:
Appeal against orders rejecting refund claims and upholding Order-in-Original; Appropriation of refund against outstanding demands; Legal sustainability of appropriation of refund; Voluntary deposit of demands by the appellant.

Analysis:
1. The appeals were directed against orders dated 08.12.2022 by the Commissioner (Appeals) CGST, Jammu, rejecting the appellant's refund claims and upholding the Order-in-Original. The issue in both appeals was identical, hence taken up together.
2. The appellants were engaged in the manufacture of P&P Medicines and availed area-based exemption through self-credit facility of duty paid. The CESTAT had earlier allowed a refund of education cess, leading to refund claims of Rs. 15,00,000/- and Rs. 32,77,590/- respectively. The Adjudicating Authority appropriated these amounts against total demands on account of value addition confirmed for Feb 2012 to April 2012.
3. The Commissioner (Appeals) upheld the appropriation based on a Supreme Court judgment, stating that refund over and above value addition is inadmissible, making the sanctioned refunds improper.
4. The appellant voluntarily deposited the demands against the orders from Feb 2012 to April 2012 and informed the jurisdictional Deputy Commissioner. The appellant argued that the amounts appropriated were excess recoveries against the demands already paid and requested a refund.
5. The appellant contended that the appropriation of refunds against already paid demands was unlawful and double payment of duty should not be accepted. The Authorized Representative supported the findings of the impugned order.
6. The Member (Judicial) found that the appellant filed refund claims based on CESTAT orders but the Adjudicating Authority appropriated the refunds against outstanding demands. The appellant had voluntarily deposited the entire demand amount.
7. The Member noted that the appellant had informed the department of the full payment, but the department did not acknowledge it. The appropriation of refunds against paid demands was deemed legally unsustainable.
8. The Member held that the impugned orders were not legally sustainable. The orders were set aside, and both appeals of the appellant were allowed with consequential relief as per law.

This detailed analysis highlights the legal proceedings, the basis of the appeals, the appropriation of refunds against demands, and the voluntary deposit of demands by the appellant, leading to the decision by the Member (Judicial) to set aside the impugned orders.