Appropriation of rebate claim against duty liability disputed in appeal.

PJ/CASE LAW/2014-15/2302

Case:-M/s RONALD PHARMACEUTICALS PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, VADODARA-I

Citation:- 2014-TIOL-918-CESTAT-AHM

Brief facts:-The appellant filed rebate claim of Rs. 10,27,242/- under Rule 18 of the Central Excise Rules, 2002 with the Assistant Commissioner, Central Excise Division-I, Vadodara on 29.04.2010, which was sanctioned but appropriated towards the appellant's arrear liability of Rs. 51,87,010/- (Duty Rs. 25,93,505/- + Penalty Rs.25,93,505/-) plus interest vide Order-in-Original No. Reb/ 200-280/ Ronald/ Div-I/ 10-11 dated 28.07.2010 despite the appellant having filed Appeal along with Stay Application with the CESTAT against Order-in-Appeal No. Commr. (A)/ 253/VDR-I/2009 dated 28.10.2009. The appellant, while replying to certain clarifications sought by the Divisional Assistant Commissioner, submitted in its letter dated 10.02.2011 that the action taken by the Department to appropriate the rebate claim was not proper, and that the rebate amount of Rs. 10,27,242/- be paid back to them along with interest at appropriate rate in terms of Section 11BB of the Central Excise Act, 1944 as the CESTAT had finally disposed of the appellant's aforesaid appeal by way of remand vide its Final Order No. A/1732/WBA/AHD/2010 dated 04.10.2010 holding that the demand for the normal period was alone sustainable against the appellant. The original authority granted rebate of Rs. 7,28,833/- out of the total amount of Rs. 10,27,242/- after appropriating a sum of Rs. 2,98,409/- towards appellant's liabilities under another Order-in-Original dated 28.07.2010 vide its Order-in-Original-No. Refund/ 371/ Ronald/ Div-I/11-12 dated 13.05.2011 but did not grant any interest on the delayed payment of rebate. Being aggrieved with the Order-in-Original dated 13.05.2011;the appellant filed an appeal with the Commissioner (Appeals) for grant of interest for the period from the date of expiry of three months from the date of filing of rebate claim till the date when the amount it was actually paid by the Revenue. However, the appeal filed by the appellant was dismissed vide impugned Order-in-Appeal by the first appellate authority. Hence, the present appeal.

Appellant’s contention:-Shri Dhaval Shah, Ld. Advocate for the appellant, argued that interest at appropriate rate is required to be paid after the expiry of 3 Month from the date (29.4.2010) of filing the refund claim. He relied upon the following case laws:

i) Voltas Ltd vs Commnr of CE, Hyderabad - [2008 (9) STR.591 (Tri.Bang)]
ii) West Bengal Coal Fields Ltd vs Union of India [1989 (43) ELT.27 (Bom.)]
iii) Commnr of CE vs Milton Plastics - [2008 (232) ELT.653 (Tri.-Munbai)] =2008-TIOL-2709-CESTAT-MUM
iv) Ranbaxy Laboratories Ltd vs Union of India [2011 (273) ELT.3 (SC)] = 2011-TIOL-105-SC-CX
v) Stelco Gujarat Ltd vs Commnr of CE Vadodara [2009 (233) ELT.541 (Tri.-Ahmd.)]

Respondent’s contention:-Shri Manoj Kutty (AR) appearing on behalf of the Revenue deferred the orders passed by the Adjudicating Authority and the First Appellate Authority

Reasoning of judgment:-A rebate claim of the appellant was filed on 29/04/2010 which was found admissible and sanctioned on 28/07/2010. However, the same was adjusted against some arrears pending against the appellant. The appropriation made by the Revenue was protested by the appellants that such adjustment without putting them to notice was not permissible. Separate appeals filed against the cases of arrears, against which adjustment was made and CESTAT vide order dt 4/10/2010 remanded those cases back to the Commissioner (A) to decide the appeals without insisting for a pre-deposit. In the light of above factual matrix, adjustment of arrears from the rebate claim were not justified when separate appeals/stay applications were pending before the appropriate appellate authorities. Full rebate payment was due to the appellant after three months from the date (29/4/2010) of filing the rebate claim but was paid only on 13/5/2011 by the Adjudicating Authority. Interest from 29/7/2010 to 13/5/2011 is payable to the appellant as the rebate claim in fact was sanctioned on 28/7/2010 but adjusted against some arrears which were separately under litigations. This view is also fortified by the case laws relied upon by the appellant.

In view of the above findings, the appeal filed by the assessee was allowed.

Decision:- Appeal allowed.

Comment:-The analogy drawn from the case is that adjustment of arrears from the rebate claim is not justified when separate appeals/stay applications are pending before the appropriate appellate authorities. Furthermore, as there was delay in sanction of rebate claim by more than 3 months from the date of filing, interest from 29/7/2010 to 13/5/2011 was held to be payable to the appellant.

Prepared By: - Lovina Surana

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PJ/CASE LAW/2014-15/2302

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