Binding Board circulars bar adjustment of sanctioned rebate against a disputed demand during pending appellate scrutiny.

A sanctioned rebate/refund under Rule 12(1)(a) read with section 11B of the Central Excise Act could not be appropriated against an earlier confirmed demand while that demand remained under appeal and no coercive recovery was permissible. The order applied the principle that binding Board circulars govern departmental action, so the Revenue could not act contrary to the circular or dispute its correctness by relying on a different statutory interpretation during pending appellate scrutiny. The adjustment was therefore held impermissible, and the assessee retained entitlement to the sanctioned rebate.

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Issues: Whether the department could appropriate a sanctioned rebate/refund against a pending demand despite the Board circular and pending appeal or stay proceedings.

Analysis: The rebate had been sanctioned under Rule 12(1)(a) read with Section 11B of the Central Excise Act, 1944, but was sought to be adjusted against an earlier confirmed demand. The appellate authority had already found that no coercive recovery or adjustment could be made while the demand remained sub judice and relied upon the Board's circular on the subject. The controlling legal position, as applied in the order, was that Board circulars bind the department, and the Revenue cannot contend contrary to such circulars or challenge their correctness on the footing that they conflict with the statute.

Conclusion: The adjustment of the sanctioned rebate against the pending demand was impermissible, and the Revenue's appeal failed.

Final Conclusion: The assessee retained entitlement to the sanctioned rebate, and the departmental attempt to set it off against the disputed demand was rejected.

Ratio Decidendi: A binding Board circular governs departmental action, and the Revenue cannot ignore or challenge it by asserting a contrary statutory interpretation while the underlying demand remains under appellate scrutiny.

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