Recovery notice and appropriation of rebate upheld where no stay was shown against outstanding Government dues.

A sanctioned rebate or payable amount may be appropriated against outstanding Government dues of a previous owner where a recovery notice under the Customs Act and Central Excise Act remains operative and no stay order is produced. The purchaser had acquired only the assets in public auction and had not assumed the earlier company's liabilities, but the recovery notice issued against the purchaser was not stayed. On those facts, the adjustment of the sanctioned amount against the pending dues was upheld, and the Commissioner (Appeals) was found to have erred in setting aside the adjudication order. The Revenue therefore succeeded and the recovery action was sustained.

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Issues: Whether the rebate amount could be appropriated against outstanding Government dues of the previous owner by invoking the recovery notice issued under Section 142 of the Customs Act, 1962 and Section 11 of the Central Excise Act, 1944.

Analysis: The purchaser had acquired only the assets in public auction and had not taken over the liabilities of the earlier company. However, a notice for recovery of Government dues had been issued to the purchaser, and no stay order was produced against that notice. In these circumstances, the appropriation of the sanctioned amount against the pending dues was treated as valid, and the Commissioner (Appeals) was held to have erred in setting aside the adjudication order.

Conclusion: The appropriation of the amount against the dues was upheld and the challenge to the recovery action failed.

Final Conclusion: The Revenue succeeded, and the adjudication orders restoring the appropriation were sustained.

Ratio Decidendi: Where a valid recovery notice for Government dues remains operative and no stay is shown, the amount payable to the claimant may be adjusted against the outstanding dues in accordance with the statutory recovery provisions.

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