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Divi’s Laboratories Ltd. Versus Commr. of C. Ex., Cus. & S.T., Hyderabad-III

Adjustment of Refund of service tax with interest liability - Interest was arisen as per EA-2000 Audit Objection - Refund was allowed under Notification No. 41/2007-S.T - Held that:- when the audit pointed out that they were not eligible for the credit, the appellant had simply reversed the credit. Once such a reversal was made, and when the audit pointed out that interest was liable to be paid on 29-9-2008, the appropriate procedure to follow was to issue a show cause notice as per sub-section .....

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of assessee. - ST/2158/2010-SM - Final Order No. 20663/2015 - Dated:- 6-3-2015 - Shri B.S.V. Murthy, Member (T) Shri B. Venugopal, Advocate, for the Appellant. Shri A.K. Nigam, AR, for the Respondent. ORDER Nobody is present on behalf of the appellant. The appeal is against the decision of the lower authorities wherein refund of ₹ 44,887/- held to be admissible and sanctioned to the appellant in terms of Notification No. 41/2007-S.T., dated 6-10-2007 but appropriated and adjusted towards .....

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is appropriated and adjusted towards the interest amount of ₹ 8,85,326/- arising out of EA-2000 audit objection in respect of para 7 for the period ending December, 2007 which is pending recovery as on date. It is his submission that in the absence of a specific order confirming demand and interest, adjustment could not have been made. 2. Learned AR on the other hand would draw my attention to the impugned order-in-appeal wherein the Commissioner (Appeals) has observed that he has ca .....

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the Service Tax amount of ₹ 1,13,50,331/- paid on the said output services. (iii) As the said service was in the nature of output service the audit objected with regard to the availment of Cenvat credit of the Service Tax paid. (iv) on being pointed out by the audit, the assessee had reversed the entire service tax credit amount vide RG.23A Part II Sl. Nos. 4066/29-2-2008; 4067/29-2-2008 & 4068/29-2-2008. (v) The audit observed that, the assessee had not paid the interest, although the .....

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adjusted will have to be paid with interest. Admittedly from the reproduced portion of the report, it is seen that when the audit pointed out that they were not eligible for the credit, the appellant had simply reversed the credit. Once such a reversal was made, and when the audit pointed out that interest was liable to be paid on 29-9-2008, the appropriate procedure to follow was to issue a show cause notice as per sub-section (2B) of Section 11A of Central Excise Act, 1944 which can be applie .....

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such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of duty so paid : Provided that the Central Excise Officer may determine the amount of short payment of duty, if any, which in his opinion has not been paid by such person and, then, the Central Excise Officer shall proceed to recover such amount in the manner specified in this section, and the period of one year referred to in sub-section (1) shall be counted from the date o .....

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ed that the interest under section 11AB shall be payable on the amount paid by the person under this sub-section and also on the amount of short-payment of duty, if any, as may be determined by the Central Excise Officer, but for this sub-section. Therefore, once the appellant reversed the credit and intimated to audit officers and as a result when the audit objection was communicated, the concerned jurisdictional officers also came to know about it, it was the responsibility of the jurisdiction .....

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