Tribunal deems adjustment of interest without notice incorrect, remands for fresh decision

The Tribunal held that the adjustment of interest amount from the rebate claim without prior intimation to the appellant was incorrect. The Tribunal emphasized that the appellant must be informed about any recoverable amount before adjustment. As there was no evidence of intimation to the appellant regarding the interest amount, the impugned order was deemed unsustainable. The matter was remanded for a fresh decision, stressing that the appellant should have the opportunity to be heard on the interest amount before any adjustment is made.

---

---

Issues:
1. Adjustment of interest amount from rebate claim under Section 11AB of Central Excise Act, 1944 without intimation to the appellant.

Analysis:
The appellant, a manufacturer of galvanized transmission tower parts, filed export rebate claims amounting to Rs. 35,24,413 for exports made by them. The Jurisdictional Assistant Commissioner sanctioned a rebate claim of Rs. 34,06,315 but deducted an interest amount of Rs. 8,08,190 from the rebate claim without prior intimation to the appellant. The appellant appealed against this decision to the Commissioner (Appeals) who upheld the deduction. The appellant then approached the Appellate Tribunal challenging the order-in-appeal.

During the hearing, the appellant's counsel argued that the adjustment of interest amount from the rebate claim was incorrect as the appellant was never intimated about the interest liability under Section 11AB of the Central Excise Act, 1944. The counsel also cited a previous judgment of the Tribunal in the appellant's own case where a similar adjustment was set aside due to lack of confirmed dues against the appellant. On the other hand, the Jt. CDR defended the impugned order, stating that interest liability on duty paid on differential amounts received due to price variation is automatic under Section 11A(2B) and Section 11AB, as per the Supreme Court judgment in CCE v. SKF India Ltd.

After considering the submissions, the Tribunal noted that while Section 11 allows for adjustment of recoverable amounts from refunds or rebates payable to an assessee, the appellant must be intimated about any recoverable amount before adjustment. In this case, there was no evidence of intimation to the appellant regarding the interest amount. Therefore, the Tribunal held that the impugned order was not sustainable. The matter was remanded to the original Adjudicating Authority for a fresh decision, emphasizing that the appellant must be given an opportunity to be heard on the interest amount before any adjustment is made. The appeal was disposed of accordingly.

---