Refund adjustment against another company's stayed duty demand is impermissible where the entities are separate legal persons.

A refund due to one assessee could not be appropriated against an outstanding duty demand raised against a different and independent legal entity. The refund belonged to the respondent company, while the demand related to another company, so cross-adjustment was impermissible in law. That impropriety was reinforced by the fact that recovery of the other demand had already been stayed by the High Court. The adjustment was therefore illegal, and the order setting it aside was sustained, with the Revenue's challenge failing.

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Issues: Whether a refund sanctioned in favour of one company could be appropriated against an outstanding duty demand raised against another company that was a separate legal entity, particularly when recovery of that demand had already been stayed.

Analysis: The refund belonged to the respondent company, whereas the outstanding demand pertained to another entity. A refund cannot be lawfully adjusted against the dues of a different and independent legal person. The further circumstance that recovery of the other demand had been stayed by the High Court made the adjustment contrary to law.

Conclusion: The adjustment of the refund against the demand of another company was illegal, and the order setting aside such adjustment was upheld in favour of the assessee.

Final Conclusion: The Revenue's challenge failed, and the order disallowing appropriation of the refund against a third party's stayed demand was sustained.

Ratio Decidendi: A refund due to one assessee cannot be appropriated towards the duty liability of another distinct legal entity, especially where recovery of that liability has been stayed.

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