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2017 (2) TMI 617 - CESTAT HYDERABAD

2017 (2) TMI 617 - CESTAT HYDERABAD - TMI - Interest on the delayed payment of rebate claims - export of goods - whether the appellant are eligible for interest from three months after the date of sanctioning the rebate for the reason that the appropriation was illegal and against the provisions of law? - Held that: - the assessee is entitled to interest for delay in payment of sanctioned rebate on account of the sanctioned rebate being adjusted to pending arrears which have not reached finality .....

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oner (AR) for the Respondent. Ms. Sulekha Beevi, C.S., Member (Judicial) [Order per: Sulekha Beevi, C.S.] 1. Brief facts are that the appellants are engaged in manufacture of paper and paper boards are registered with the Central Excise Department as well as Service Tax Department. They export goods to various countries and the exports were made after paying appropriate duty of excise on the goods. The appellants thereafter filed rebate claim under Rule 18 of the Central Excise Rules, 2002. The .....

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of credit in the CENVAT account. However, the original authority appropriated the amounts sanctioned in cash towards duty confirmed against Order-in-Original No. 67/2012 dated 23.11.2012 Order-in-Original No. 2/2013 dated 16.01.2013 and Order-in-Original No. 30/2012 dated 13.12.2012. 3. Details of the amount sanctioned and amount appropriated as tabulated by the appellant is shown as under: Sl. No Appeal No. Order-in-Original No./Date Amount Refunded Towards Amount Appropriated Total amount gra .....

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RB) dt.16.01.2013 Demand ₹ 22,30,172/- Penalty ₹ 10,000/- Interest u/s 11AB/11AA of CEA, 44 12,26,497/- [Demand (part)] 3. E/22137/2015 13/2013 dt.25.09.2013 38,77,410/- 37,46,582/- 1,30,828/- 1.OIO No.2/2013/PRB) dt. 16.01.0213 10,13,675/- [Demand (balance)] 2,77,152/- [interest] 10,000/- [penalty] 2. OIO No.30/2012 (JR)/RJY/CEX dt.13/12/2012 Demand ₹ 1,02,080/- Penalty ₹ 1,02,080/- Interest u/s of CCR, 04 1,02,080/- [Demand] 1,02,080/- [Penalty] 14,397/- [Interest] 3. A .....

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03/- after appropriation. The appeals preferred by appellants against the Order-in-Original Nos. 67/2012, 2/2013 and 30/2012 was pending before the Commissioner (Appeals) along with stay applications at the time of appropriation. 5. Aggrieved by the order of appropriation, the appellant filed 3 separate appeals before the Commissioner (Appeals). Meanwhile, the duty, interest and penalty confirmed by the Order-in-Original Nos. 67/2012, 2/2013 and 30/2012 was set aside by an order passed by the Co .....

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riation was illegal and against the provisions of law. 6. On behalf of the appellant, the Cd. Counsel Sh. S. Tenmozhi appeared and argued the matter. She submitted that the rebate sanctioned in cash was appropriated by the rebate sanctioning authority towards duty, interest and penalty confirmed under Order-in-Original Nos. 67/2012, 2/2013 and 30/2012 which had not attained finality. It is submitted that the appellant had already filed appeals along with stay applications and the same were pendi .....

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fficient, it should also result in actual refund of the amount. When the appeal as well as the stay application was pending before the Commissioner (Appeals) the rebate sanctioning authority ought not to have appropriated the amount. That the appeal and the stay application were not delayed on account of any intentional act of the appellant. The Cd. Counsel relied upon the following decisions: (i) Ranbaxy Laboratories Ltd., Vs Union of India [201 1 (273) E.L.T. 3 (S.C.)] (ii) Ronald Pharmaceutic .....

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Though a stay application also had been filed the same was pending and the appellant was not able to produce any stay order to establish that the recovery of the demand was stayed. That therefore, the rebate sanctioning authority has rightly appropriated the amount payable to the appellant towards the arrears. He submitted that the Commissioner (Appeals) has allowed interest from the date of Order-in-Appeal dated 21.03.2014 by which the duty, interest and penalty was set aside. That the appellan .....

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ls) vide order dated 21.03.2014. Thus during the pendency of the appeal and stay application, the rebate sanctioning authority has appropriated the sums from the sanctioned amount, Undisputedly, the appropriation has taken place before the demand attained finality. The rebate sanctioning authority was well within its knowledge that the appellant has filed appeal as well as stay application before the Commissioner (Appeals). The delay in disposing the stay application was not due to any intention .....

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gment was affirmed by the Hon'ble Supreme Court reported in [2016 (335) ELT A 79 (S.C.)]. The Hon'ble High Court of Punjab & Haryana in the above judgment observed as under: 47. Thus, in respect of first question of law, it is held that direction to recover the duty demanded and penalty levied, if the stay was not granted within 30 days, contravenes the right of consideration of appeal and of an application for waiver of pre-deposit conferred under Section 35B read with Section 35F o .....

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otice of the fact that the delay in the disposal of an appeal by an assessee or for that matter the delay in the disposal of a stay application may take place for reasons which lie outside the control of the assessee. Where the failure of the Appellate Authority to dispose of the appeal or the application for stay arises without any default on the part of the assessee, and without the assessee having resorted to any dilatory tactics, there would, in our view, be no reason or justification to pen .....

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submits that the Board has directed that a period of thirty days should be allowed to lapse after the filing of the appeal, allowing the assessee time to move the Appellate Authority for the disposal of the stay application. The reason why the submission cannot be accepted is because, in a situation where the Commissioner (Appeals) or, as the case may be, the CESTAT are unable to decide the application for stay within a period of thirty days of the filing of the appeal, it would be completely ar .....

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ere an assessee has done everything within his control by moving an application for stay and which remains pending because of the inability of the Commissioner (Appeals) or the CESTAT to dispose of the application within thirty days, it would, to our mind, be a travesty of justice if recovery proceedings are allowed to be initiated in the meantime. The protection of the revenue has to be necessarily balanced with fairness to the assessee. That was why, even though a specific statutory provision .....

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r appellant has held that the assessee is entitled to interest for delay in payment of sanctioned rebate on account of the sanctioned rebate being adjusted to pending arrears which have not reached finality. The discussion of the Tribunal in the case of Ronald Pharmaceuticals Private Ltd., (supra) is noticed as under: 5. Heard both sides and perused the case records. A rebate claim of the appellant was filed on 29-4-2010 which was found admissible and sanctioned on 28-7-2010. However, the same w .....

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s 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 un .....

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by Hon'ble High Court of Karnataka in the case of Commissioner Vs Stella Repair Works [2011 (267) ELT 495 (Kar)]. In Stella Repair Works the Hon'ble High Court of Karnataka observed that perusal of Section 11 of Central Excise Act, makes it very clear that the said provision does not contemplate adjustment of monies due to the assessee towards the amount due to the revenue. That the said section speaks about garnishee proceedings and recovery by attachment and sale. For better appreciat .....

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amount due to the revenue. Therefore reliance placed on the said provision does not help the revenue. Apart from the said provision, the learned counsel was not able to point out any other provision which enables the revenue to adjust the amounts due to them as against the amounts due by them to the assessee. In fact reliance is placed on the Judgments of CESTAT which gives an impression that adjustment is permissible. Such adjustment is not based on any statutory provision. When once the adjudi .....

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