No amount can be retained by department without confirmed demand- refund allowed.

PJ/Case Laws/2012-13/1241

Case:-Commissioner of Central Excise., Chandigarh versus Shiv Saraswati Steel Industries

Citation:- 2012 (279) E.L.T. 415 (Tri- Del)

Brief Facts:-The Respondent filed an application for refund. They stated that the department made them debit the amounts in PLA under coercion and the amount was not voluntarily paid. They submitted that till the date of filing of the refund application, no Show Cause Notice giving the details of duty evaded by them had been issued to them. The Deputy Commissioner who considered the refund application was of the view that the amount deposited by the Respondent was towards their accepted duty liability on account of clandestine clearances and in fact as per the case made out by Revenue, evasion of duty is to the tune of Rs. 35.00 lakhs approximately whereas they have deposited only Rs. 8.00 lakhs and, therefore, the claim for refund is untenable and pre-mature and rejected the refund claim. Aggrieved by the order of the Deputy Commissioner, the Respondent filed an Appeal with the Commissioner (Appeals). He considered the appeal and he ordered that refund as requested should be granted because there was no duty confirmed against the Respondent and there was not even a Show Cause Notice till the date of hearing. Aggrieved by this order; Revenue has filed this appeal along with stay Application.

Appellant’s Contention:- . The Appellant argues that the amount in question was debited voluntarily by the Respondent and he cannot claim any refund when the investigations was continuing. He further informs that a Show Cause Notice detailing the offence was issued and he argues that the order of the Commissioner (Appeals) is bad in law because the deposit was made voluntarily towards duty liability that was unearthed during investigation.

Respondent’s Contention:- The Respondent submits that the deposit was not made voluntarily and that they will reply to the Show Cause Notice issued to them. They undertake that if any duty is found due from them such amount will be remitted. His is argument is that, there is no confirmed duty demand against them and the department has no right to retain any money in the absence of a confirmed duty demand.

Reasoning of Judgement:- Hearing on Both Sides that There is no merit in the argument that an assessee can not claim refund. Against a deposit made voluntarily. The question whether the deposit was made voluntarily itself is under dispute. The very fact that they have filed a refund claim would show that the deposit was not made voluntarily but was made under duress. Further even if the deposit is made voluntarily they can claim refund of such deposit as in the case of any other duty payment or duty deposit and the department has no right to retain any amount so long as there is no confirmed duty demand pending against the assessee. So I do not see any reason to interfere with the order passed by the Commissioner (Appeals). The appeal filed by the Department is rejected.

Decision:- Appeal Rejected.

Comment:- This is important decision that the amount deposited by the manufacturer either voluntarily or otherwise under duress by the department then it cannot be retained by the department unless and until it is supported by a confirmed demand. If the amount is deposited and there is no confirmed demand then the same has to be refunded to the assesee. This decision is very important for manufacturers as the department normally asks them to deposit the amount and later on does not issue show cause notice at all. Hence, in all such cases, the manufacturer can claim refund of the same from the department.

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PJ/Case Laws/2012-13/1241

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