Tribunal grants refund claim, rejects adjustment without notice. Precedent cited. Appeals allowed.

The Tribunal set aside the rejection of the refund claim, citing the duty payment was made under protest, following the precedent in Mafatlal Industries v. UOI. The Tribunal also overturned the adjustment of Rs. 4,89,909 from the refund claim, stating that without a formal notice under Section 11-A, the Department could not adjust the amount. The appeals were allowed, and the impugned order of the Commissioner (Appeals) was set aside, granting consequential relief and interest as per Section 11BB of the Act.

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Issues:
1. Rejection of refund claim of Rs. 5,41,781 and adjustment of duty of Rs. 4,89,909.

Analysis:
The appeal was filed against the rejection of a refund claim and the adjustment of duty. The refund claim was rejected on the grounds of limitation as the duty was not paid under protest. However, it was argued that the duty payment should be considered under protest as the order under which the duty was paid was challenged before the Tribunal, following the precedent set by the apex court in the case of Mafatlal Industries v. UOI. The Tribunal found that the lower authorities had overlooked the apex court's ruling and set aside the rejection of the refund claim.

The adjustment of Rs. 4,89,909 from the refund claim was made based on a classification issue decided by the Tribunal. It was contended that no show cause notice was served under Section 11-A of the Act raising a demand of duty on that account. Without the issuance and confirmation of such a notice, the Department could not adjust the amount. Citing the case of Kutty Flush Doors & Furniture, the Tribunal held that adjustment of an unconfirmed demand cannot be made against the refund claim of the assessee. The Tribunal rejected the Revenue's argument that the department was entitled to adjust the amount due to a differential duty without a formal notice under Section 11-A. The impugned order in this regard was set aside.

Consequently, the impugned order of the Commissioner (Appeals) was set aside, and the appeals of the appellants were allowed with consequential relief as per law, along with interest as per the provisions of Section 11BB of the Act.

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