RSWM Ltd. Vs Commissioner of Central Goods and Service Tax, Excise and Customs (CESTAT Delhi)
Admittedly, the dispute with regard to rebate totalling Rs.59,16,907 was sub judice before the Hon’ble Rajasthan High Court on the date of adjustment vide orders-in-original dated 28.01.2013. The said order is patently illegal and in violation of the instructions of the Board’s Circular No.13/92-CX-6 dated 4.11.1992. I further find that this Tribunal in its precedent judgement in the case of Voltas Ltd. Vs. CCE (Supra) has held that Section 11 can be invoked only when the demand proposed to be adjusted have reached finality. Similar view was taken by another Division Bench in Nirmal Products Vs. CCE (supra).
I further find that as the dispute relating to rebate for the amount of Rs.59,16,907/- has been subjudice before one appellate forum or the other and passing of the adjudication orders and appellate orders pursuant to protective show cause notices 12.01.2010 is ab-initio void in the eyes of law. Such adjudication and appellate orders are declared to be nonest under law.
FULL TEXT OF THE CESTAT DELHI ORDER
These Appeals have been filed against common Order-in-Appeal. The issue involved is whether the adjudicating authority can adjust refund/rebate claim sanctioned, against Government dues.
2. The brief facts are that the Appellant is engaged in manufacture and export of cotton yarn and manmade yarn, had filed 15 rebate claims under Rule 18 of the Central Excise Rules, totalling Rs. 59,16,907/- with respect to goods exported during May and June, The duty paid on the goods exported was paid from Cenvat credit account at the rates prescribed under Notification No. 29/2004. The goods were exported under duty drawback scheme as per Notification No. 68/2007-Cus dated 16/07/2007, on which the Appellants did not take credit of duty paid on the corresponding inputs, in relation to manufacture of goods which were exported. These facts are corroborated as per ARE-I which were duly approved by the Jurisdictional Range Officer.
3. The Assistant Commissioner vide Order-in-Original No. 375389/08-CE (rebate) dated 28/01/2009 rejected the rebate claims for the total amount. However, he allowed the Appellant to restore the amount in their Cenvat credit account, from where the payment of duty was made, observing that the Appellant was not liable to pay duty on the finished goods for export, as per notification no. 30/2004-CE dated 09/07/2004.
4. Being aggrieved, Revenue filed Appeal before the Commissioner (Appeals) on the ground that allowing re-credit in this manner tantamount to refund. The Appellants had not requested for restoration of amount in their Cenvat credit account. Hence, the Order-in-Original is not legal to the extent allowing re-credit, and no refund can be granted under Section 11B without an application/request by the assessee.
5. This appellant had appeared before the Commissioner (Appeals) and filed their objections. However, the Commissioner (Appeals) allowed the Revenue Appeals vide common Order-in-Appeal Nos. 457471 dated 25/11/2009, by holding that the re-credit allowed was not correct.
6. Being aggrieved, the Appellants filed application before the Revisional Authority in the Ministry of Finance, Government of India. The Revisional Authority by order no. 1575-1589/11-CX dated 07/12/2011 upheld the Order-in-Appeal dated 25/11/2009.
7. Being aggrieved, the Appellant filed Writ petition before the Hon’ble Rajasthan High Court, the Hon’ble High Court was pleased to issue notice to the Revenue which was served on Revenue vide notice dated 09/02/2012 issued by the High Court.
8. In the meantime, the Revenue issued 15 Show-Cause Notices, on protective basis, all dated 12/01/2010 for demand totalling Rs. 59,16,907/-. The Appellant had requested to keep the Show-Cause Notice in abeyance as the matter was sub-judice. However, the Assistant Commissioner passed ex-parte Order-in-Original No. 317/2012-CE (demand) dated 13/02/2012 confirming the total demand as proposed Rs.59,16,907/-in the protective Show-Cause Notices, alongwith interest of Rs. 36,11,907/- under Section 11AB of the Act.
9. Being aggrieved, the Appellant preferred Appeals before Commissioner (Appeals), which were rejected by the Commissioner (Appeals) vide Order-in-Appeal No. 57 (VC) CE/JPR-II/2013 dated 15/05/2013. It is relevant to mention that the Hon’ble Rajasthan High Court had granted interim stay vide order dated 05/02/2013 and thereafter, the Stay was confirmed to remain operative during the pendency of the Writ Petition by subsequent order dated 22/03/2013, copies of orders filed in the course of hearing before the Tribunal.
10. Being aggrieved with the Order-in-Appeal dated 15/16th May 2013, the Appellant preferred Revision application before the Revisional Authority in the Ministry of Finance, GOI.
Period Sept’12 to Nov’12, Rebate claim
11. The Appellant, thereafter filed further rebate claims totalling Rs. 85,38,790/- relating to the subsequent period September 2012 to November 2012, five rebate claims. These claims were sanctioned vide OIO nos. 76-81, 82-86, 87-92, 93-96 and 99-100/2013-CE rebate (all dated 28/01/2013). However, the adjudicating authority adjusted the amount of Rs. 59,16,907/- which were sub-judice (before Rajasthan High Court) and also interest on the same of Rs. 36,11,907/-, totalling Rs.95,28,814/-. It is relevant to mention that this amount had been confirmed against protective Show-Cause Notices, vide OIO dated 13/02/2012 (relating to period May & June, 2008).
12. Being aggrieved with the Orders-in-Original dated 28/01/2013, the Appellant had preferred Appeals before the Commissioner (Appeals) which have been rejected by the impugned Order-in-Appeal dated 28/03/2018. The Commissioner (Appeals) by the impugned common OIA has been pleased to reject the appeals observing that-in terms of Section 11 of the Act, the adjudicating authority is empowered to deduct the amount so payable, from any money owing to the person from whom such sums may be recoverable or due, which may be in his hand or under his disposal or control or may be in the hands of another officer, specially when the Appellants lost their Appeal before the Revisional Authority in the Ministry of Finance, GOI. Accordingly held that the adjudicating authority have rightly adjusted the adjudicated amount of Rs.59,16,907/- alongwith interest against the sanctioned rebate amount.
13. Being aggrieved the Appellant is before this Tribunal inter alia on the grounds that
(i) No recovery under Section 11 of the Act is permissible while sanctioning rebate claim, reliance is placed on the ruling of this Tribunal in PANACEA ALLOYS PVT LTD Vs COMMISSIONER OF CENTRAL TAX AND SERVICE TAX, PUNE-I (2018-TIOL-1305-CESTAT-MUM), where it was held that the rebate amount which is sanctioned to assessee cannot be appropriated by invoking the provisions of Section 11, more specifically when the dues are from a totally different entity.
(ii) It is further urged that as the dispute regarding the rebate amount of Rs. 59,16,907/- is sub judice before Hon’ble Rajasthan High Court in Writ Petition No. 989/2012 (filed on 28.01.2012) and there being Stay granted by the Hon’ble High Court, the adjustment made by the Court below is ab initio void. The Appellant relies on the Board Circular No. 13/92-CX-6 dated 04/11/1992 which provides-refund amount due to assessee should be appropriated by proper officer against confirmed demand only, when the time limit for filing appeal against such confirmed demand has expired.
14. Ld. Counsel has relied on the following case laws:-
(1) tell Rubber Works (Unit-II) Vs. CCE [2012 (275) ELT 404 (Kar.)]
(2) Indorama Synthetics (I) Ltd. Vs CCE [2013 (291) ELT 559 (Tri.).
(3) Voltas Ltd. Vs. CCE [2006 (201)ELT 615 (Tri. Bang.)
(4) Nirmal Products Vs. CCE [2017-TIOL-2946-Tri-Delhi]
15. Ld. Authorised Representative for Revenue/respondent has relied upon the impugned order.
16. Having considered the rival contentions, I find that, admittedly, the dispute with regard to rebate totalling Rs.59,16,907 was sub judice before the Hon’ble Rajasthan High Court on the date of adjustment vide orders-in-original dated 28.01.2013. The said order is patently illegal and in violation of the instructions of the Board’s Circular No.13/92-CX-6 dated 4.11.1992. I further find that this Tribunal in its precedent judgement in the case of Voltas Ltd. Vs. CCE (Supra) has held that Section 11 can be invoked only when the demand proposed to be adjusted have reached finality. Similar view was taken by another Division Bench in Nirmal Products Vs. CCE (supra).
17. I further find that as the dispute relating to rebate for the amount of Rs.59,16,907/- has been subjudice before one appellate forum or the other and passing of the adjudication orders and appellate orders pursuant to protective show cause notices 12.01.2010 is ab-initio void in the eyes of law. Such adjudication and appellate orders are declared to be nonest under law.
18. In view of my findings, I allow these appeals and set aside the impugned orders-in-appeal.
19. The appellant is entitled to consequential benefits. The Adjudicating Authority is directed to disburse the sanctioned rebate amount of Rs.85,38,790/- with interest under Section 11 BB of the Act within a period of 30 days from the date of receipt of copy of this order.
(pronounced on 22.04.2022)
