2006 (3) TMI 662 - AT - Central Excise

High Court upholds duty appropriation from rebate amounts, emphasizing proper appellate procedures.

The High Court upheld the lower appellate authority's decision to appropriate duty and interest from rebate amounts due from the appellants. The court ... Demand and interest Issues:1. Appropriation of duty and interest from rebate amount.2. Validity of original demand and recoverability.3. Recoverability of interest from the appellants.4. Proper appellate authority to challenge the demand.Analysis:1. The lower appellate authority upheld the action of appropriating duty and interest due from the appellants from the rebate amount payable to them. The authority noted that the rebate claim was sanctioned to the appellant under Rule 18 of the Central Excise Rules, 2002. The differential duty demand was raised under DD2 as per the provisions in the Central Excise Act and Rules. The appellants had initially created a legal dispute but eventually paid the differential duty, indicating its recoverability. The High Court dismissed the writ challenging the demand's legality. The lower appellate authority found no merit in the appellant's submissions and rejected the appeals.2. The advocate for the appellants argued that the original demand was a nullity and not recoverable, including the interest. Citing relevant decisions, the advocate contended against the recoverability of the demand and interest. However, the lower appellate authority observed that the appellants had filed a writ petition against the demand, which was dismissed by the High Court. Consequently, the authority held that the amount, along with interest, was recoverable from the appellants, justifying the adjustment made by the original authority against the rebate amount.3. The Tribunal highlighted that the appellants did not challenge the impugned demand before the proper appellate authority, the Commissioner (Appeals). Instead, they filed a writ petition before the High Court, which was dismissed. As a result, the demand amount and interest were deemed payable by the appellants. The Tribunal affirmed the lower appellate authority's decision that the action of the original authority in appropriating the amount equal to the demand and interest from rebate claims was justified, leading to the dismissal of the appeals.This judgment emphasizes the importance of following the proper appellate procedures and the consequences of not challenging demands through the appropriate channels. It underscores the authority's power to appropriate amounts due from rebate claims in cases where the demand and interest are deemed recoverable.