In remand matters, Dept not entitled to hold on amount deposited by Assessee during the course of investigation as pre-deposit
In the instant case, investigation was conducted in the factory of Supreme Inds Ltd. (the Appellant) and some discrepancies were found with the physical stock and stock shown in Form 3CD declared under the Income Tax Act, 1961. The Appellant made a deposit of Rs. 20 lakhs during the course of investigation. Thereafter, Show Cause Notice was issued to the Appellant for demanding duty on the basis of investigation made. The Adjudicating Authority confirmed the duty demand of Rs. 10,47,000/- and also imposed a penalty of Rs. 1,91,000/-.
On appeal being filed before the Hon’ble CESTAT, Mumbai, the Hon’ble Tribunal remanded the matter back to the Adjudicating Authority for de novo adjudication. Thereafter, the Appellant filed a refund claim on September 22, 2005 for the amount deposited by them during the course of investigation.
Both the Lower Authorities rejected the refund claim on the ground that since the adjudication is yet to take place, the amount deposited by the Appellant is not required to be refunded. Hence, the refund claim filed by the Appellant is premature. Being aggrieved the Appellant preferred an appeal before the Hon’ble CESTAT, Mumbai.
The Hon’ble CESTAT, Mumbai relied upon the judgment of the Hon’ble High Court in the case of Nelco Ltd. [(2002) 144 E.L.T. 56 (Bom.)] which was further affirmed by the Hon’ble Apex Court in [(2002) 144 E.L.T. A104 (S.C.)], holding that in case of remand matter, the Department was not entitled to hold on to the amount deposited by the Assessee during the course of investigation as pre-deposit.
Accordingly the Hon’ble Tribunal held that the refund claim filed by the Appellant is not premature and the Department is required to refund the amount deposited by the Appellant during the course of investigation.