In a significant ruling, the Chennai bench of CESTAT held that the Excise Department cannot adjust the refund of pre-deposit towards the demand of duty for other periods.
The appellants, Indian Oil Corporation paid pre-deposit for filing appeal before the Tribunal, wherein the Tribunal allowed their claim. Though the department challenged the order before the Supreme Court, it was dismissed. Hence, the order attained finality.
On the basis of the above order, the appellants made a Refund application before the authorities claiming refund of pre-deposit of Rs.1,42,91,848/-, after adjusting the excise duty of Rs.75,152/-towards the siding and shunting charges for the relevant period. Another refund claim of Rs.93,88,085/- was filed after adjusting Rs.5,64,315/- towards the siding and shunting charges. After verification, the original authority sanctioned refund of Rs.30,45,352/- after adjusting Rs.15,442/- towards interest on the siding/shunting charges and balance amount against various other arrears /payments in respect of other dues alleged to be pending from the appellant.
Against the above order, though the appellants approached the first appellate authority, the same was dismissed.
The appellant carried the matter before the CESTAT on second appeal contending that the refund of pre-deposit is not adjustable with demand of duty of other issues since such payments have not attained finality.
The tribunal accepted the above contentions in the light of judicial decisions and CBEC Circular.
It noticed the decision of the Karnataka High Court in the case of CCE Bangalore Vs Stella Rubber Works, it was held that Section 11 of the Central Excise Act does not contemplate adjustment of monies due to the assessee towards the amount due to the Revenue.
Following the above decision, the division bench set aside the impugned order and observed that adjustment of pre-deposit is unjustified. “The department may take recourse to Section 11 of the Central Excise Act by initiating recovery proceedings, in case the demands have attained finality. Since Section 11 of the Central excise Act does not grant any powers of such adjustment, the same cannot be allowed.”
Read the full text of the Order below.