No set-off without confirmed demand: Revenue cannot adjust assessee's payable abatement against an unconfirmed excise liability.

Section 11 of the Central Excise Act, 1944 does not permit the Revenue to appropriate an assessee's payable abatement amount against a disputed liability when no demand has been confirmed. The assessee was entitled to abatement under Rule 10 of the Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008, and the department could not justify adjustment in the absence of express statutory authority for such set-off. The adjustment was therefore impermissible, the lower authorities' action could not be sustained, and the impugned adjustment order was set aside in favour of the assessee.

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Issues: Whether the Revenue could adjust the abatement amount payable to the assessee against an alleged duty demand by invoking section 11 of the Central Excise Act, 1944, in the absence of a confirmed demand.

Analysis: The assessee was entitled to abatement under Rule 10 of the Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008. The adjustment made by the department was sought to be justified under section 11 of the Central Excise Act, 1944, but that provision is only a recovery mechanism and does not authorise the Revenue to appropriate sums payable to the assessee towards an unconfirmed liability. In the absence of a specific statutory provision enabling such adjustment, and there being no confirmed demand against the assessee, the action of the lower authorities could not be sustained.

Conclusion: The adjustment was impermissible and the issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded and the impugned adjustment order was set aside.

Ratio Decidendi: In the absence of express statutory authority, the Revenue cannot adjust amounts payable to an assessee against a disputed or unconfirmed demand under section 11 of the Central Excise Act, 1944.

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