The Allahabad bench of the Customs Excise & Service Tax Appellate Tribunal ( CESTAT ) held that appropriation of a refund claim against a disputed pending excise appeal is not valid without the final order.
The appellant Revenue challenged the Order-in-Appeal passed by Commissioner ( Appeals ), Customs & Central Excise & Service Tax, Noida. By the impugned order Commissioner ( Appeals ) has set aside the appropriation of the sanctioned refund claim to the extent of Rs.2,33,54,306/-. The appropriation amounting to Rs.64,37,321/- under the impugned order against the confirmed demand from the sanctioned refund claim was upheld.
Shri Sarweshwar T. Khairnar Authorized Representative appeared for the Revenue and Shri Atul Gupta, & Shri Prakhar Shukla Advocates appeared for the Respondent.
In the case of Pepsico India Holdings Pvt. Ltd., the Chandigarh bench is held as follows “10. Now, we come to the appropriation of the refund. We find that 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 Tribunal Jay Kay Synthetics held that before appropriation of refund towards any arrears due, show cause notice/personal hearing is required. The appellants were not even issued a simple intimation regarding the proposed appropriation. Further, the Tribunal in Voltas Ltd. examined the scope of applicability of Section 11 to recover the sums due to the Government. It was held that only after the finality of the appeal proceedings, did the dues become arrears. In the present case, the appeal is pending before the Tribunal as per the amended provisions of Section 35F on payment of mandatory pre-deposit. The amount over such pre-deposit cannot be collected coercively.”
It was observed that in the case of ABB Ltd, the bench held “4. We have heard both sides and perused the records. According to us only one issue to be examined in these cases is whether appropriation of rebate sanctioned in cash against the customs duty arrears is in order. As per the Revenue, the appropriation is permitted by law whereas as per the appellants, the appropriation of rebate of refund cannot be done against the customs duty arrears by invoking Section 142 of the Customs Act. Further on perusal, we find that all the orders against which appropriation is made have been challenged by the appellant before this Tribunal and the stay has been granted by this Tribunal and they are pending for final disposal and the demand has not attained finality.”
“Further it is a settled position of law as held in the cases cited above that the appropriation of refund amount towards duty demand pending in other cases which has not attained finality is not legal and proper. Therefore, keeping in view the above-stated position, we are of the considered view that the appropriation of refund claims against disputed pending customs appeals is not sustainable in law as the demands in those cases have not reached finality. Therefore, we set aside the impugned order and allow the appeals with consequential relief if any.”
A two-member bench comprising P K Choudhary, Member ( Judicial ) And Sanjiv Srivastava, Member ( Technical ) dismissed the appeal of the Revenue.
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