Department cannot adjust pending demand against refund claim; tribunal emphasizes need for finality before recovery.

The tribunal held that the Department cannot adjust a sanctioned refund claim against a pending demand. Relying on Section 11 of the Central Excise Act, 1944, and the precedent set by a previous case, the tribunal concluded that refunds can only be adjusted against finalized demands. As the demand in question was still under adjudication, the Department lacked authority to recover it. Therefore, the Order under challenge was set aside, and the appeal was allowed, clarifying the legal principles surrounding refund claim adjustments and emphasizing the need for finality in demand confirmation before recovery actions.

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Issues:
1. Whether Department can suo moto adjust the amount of sanctioned refund claim to another demand against the appellant.

Analysis:
The appellate tribunal heard the appeal against Order-in-Appeal No.129 dated 19.03.2018 to determine if the Department could adjust a sanctioned refund claim against another demand. The Order in Appeal affirmed the Department's right to do so, citing para 6 in defense. The appellant contested this decision, referencing a previous case, M/s. Nirmal Products (Unit-I) vs. CCE, Jaipur. The Department, represented by the D.R., supported the impugned order. The tribunal noted the admitted facts: the appellant's sanctioned refund was adjusted against a pending demand confirmed in an earlier order. The tribunal highlighted Section 11 of the Central Excise Act, 1944, which governs the recovery of sums due to the Government.

The tribunal emphasized that the Department can only recover sums confirmed as payable by the assessee. Since the demand against which the refund was adjusted was still under adjudication, the Department had no authority to recover it. The tribunal rejected the reliance on Board Circular No. 967 dated 01.01.2013, as it was irrelevant due to the mandatory deposit made by the appellant. Relying on the precedent set by Nirmal Products, the tribunal concluded that refunds cannot be adjusted against pending demands, and Section 11 should only apply to finalized demands. Therefore, the Order under challenge was set aside, and the appeal was allowed.

This detailed analysis of the judgment clarifies the legal principles governing the adjustment of refund claims against pending demands and highlights the significance of Section 11 of the Central Excise Act, 1944. The tribunal's decision provides clarity on the Department's authority to recover sums due to the Government and emphasizes the importance of finality in demand confirmation before resorting to recovery measures.

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