Extended stay of recovery bars adjustment of rebate claims against the stayed central excise demand.

Where the Tribunal had extended a stay of recovery, the department could not appropriate sanctioned rebate amounts against the stayed central excise demand. The extended stay bound the lower authorities, so adjustment of rebate claims against the pending demand was not sustainable. The Commissioner (Appeals) was justified in directing reconsideration of the rebate claims after verification, and the revisional challenge failed. The order permitting sanction of the rebate claims, subject to necessary verification, was sustained.

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Issues: Whether rebate amounts sanctioned under Rule 18 of the Central Excise Rules, 2002 could be adjusted against confirmed demands when the earlier stay had been extended by the Tribunal.

Analysis: The sanctioned rebate amounts were appropriated towards confirmed central excise demands at a time when the original stay had lapsed, but the Tribunal later extended the stay till disposal of the appeals. Once the stay stood extended, the lower authorities were bound to give effect to that order. In such circumstances, recovery by adjustment of the rebate amounts could not be sustained, and the Commissioner (Appeals) was justified in directing reconsideration of the rebate claims after verification.

Conclusion: The adjustment of the rebate claims against the pending demand was not sustainable once the stay had been extended, and the finding in favour of the assessee was upheld.

Final Conclusion: The revisional challenge failed, and the order permitting sanction of the rebate claims after necessary verification was sustained.

Ratio Decidendi: When a Tribunal extends a stay of recovery, the department cannot enforce recovery by appropriating rebate or refund amounts against the stayed demand, and the authorities must comply with the extended stay order.

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