Tribunal rules against Commissioner's refund adjustment, citing lack of jurisdiction during pending appeals.

The Tribunal set aside the Commissioner's decision to adjust a refund against arrears due under Section 11 of the Central Excise Act, 1944. The Tribunal ruled that the Assistant Commissioner lacked jurisdiction to appropriate the amount while appeals were pending and stay orders were in effect. Citing relevant case law, the Tribunal emphasized that amounts under challenge in appeals with pending stay applications cannot be considered recoverable. Therefore, the Tribunal allowed the appeal and provided consequential relief, finding the department's appropriation unjustified in the circumstances.

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Issues:
1. Jurisdiction of Assistant Commissioner to adjust refund against arrears due.
2. Pending appeals and stay orders affecting the appropriating of amounts.
3. Justification of the Department in appropriating amounts without stay orders.

Analysis:
1. The appeal was filed by M/s. HPCL challenging the Order-in-Appeal passed by the Commissioner of Customs (Appeals), Hyderabad, regarding the refund of Rs. 1,58,56,647. The Commissioner adjusted the refund amount from the arrears due from the appellants under Section 11 of the Central Excise Act, 1944. The Assistant Commissioner had sanctioned the refund, but the Commissioner exercised his power to adjust the amount against arrears.

2. The appellants contended that the Assistant Commissioner had no jurisdiction to appropriate the amount as appeals were pending before appellate authorities, and in some cases, stay orders were granted. The Counsel mentioned that some appeals were pending before the CEGAT and the Tribunal later allowed the appeal entirely. Another appeal was pending before the Commissioner, and an interim order directed a deposit, of which Rs. 50 lakhs were pre-deposited by the appellants.

3. The Counsel argued that the department was not justified in appropriating the demands at that time, citing relevant case laws. The High Court's observation in the case of National Steel Industries Ltd. was referenced, emphasizing that the amount cannot be considered recoverable or due when under challenge in appeal with stay applications pending. The Revenue justified the appropriation of one amount due to the absence of a stay order at that time.

4. The Tribunal considered the appeals and stay orders pending before the appellate authorities, concluding that the application of Section 11 by the adjudicating authority was erroneous. Despite completed adjudications, challenges through appeals and pending stay applications indicate that the amounts were not yet recoverable or due. Therefore, the Tribunal set aside the orders below and allowed the appeal with any consequential relief.

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