2004 (6) TMI 590 - HC - Central Excise

Summary

Issues involved:
The rejection of a refund application by the Deputy Commissioner, Central Excise, and the subsequent appeal leading to a favorable decision by the Commissioner (Appeals) in favor of the petitioner. The challenge arises from a show cause notice issued by the Assistant Commissioner, Central Excise, questioning the petitioner's utilization of the refunded amount without seeking permission.

Summary:

The petitioner-firm applied for a refund of Rs.1,56,251, which was initially rejected by the Deputy Commissioner, Central Excise. However, the Commissioner (Appeals) overturned this decision in favor of the petitioner, allowing the refund. Despite the department appealing to the Customs, Excise and Service Tax Appellate Tribunal, no interim stay was obtained on the Commissioner (Appeals) order. Consequently, the petitioner utilized the refund amount and informed the department accordingly. The Assistant Commissioner then issued a show cause notice questioning this action, leading to the current challenge in the petition.

In response to the notice, the Assistant Commissioner opposed the petition, arguing that the petitioner should not have utilized the refund amount without specific permission, and highlighting the pending appeal before the Tribunal against the Commissioner (Appeals) order.

After hearing arguments from both parties, the Court found fault with the Assistant Commissioner's position, stating that the petitioner was entitled to utilize the refunded amount following the favorable decision by the Commissioner (Appeals). The Court deemed the show cause notice as unauthorized and ordered its quashing.

The Court clarified that if the department succeeds in the Tribunal appeal, the petitioner would be required to refund the amount. However, the Court did not delve into the merits of the ongoing appeal before the Tribunal.

In conclusion, the petition was allowed, and the impugned show cause notice dated 16.2.2004 was quashed and set aside.