Refund adjustment against arrears is justified where recoverable dues remain outstanding and no contrary material is produced.

Refund sanctioned with interest may be adjusted against an existing arrear demand where recoverable dues remain outstanding, and the assessee cannot insist on receiving the refund while a realizable liability subsists. On the facts noted, no appearance or material was produced to displace the Commissioner (Appeals)' finding, so the set-off of the refund against the arrears was treated as justified. The adjustment was upheld and the assessee's challenge failed.

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Issues: Whether the refund sanctioned to the assessee could be adjusted against the outstanding arrear demand under section 11 of the Central Excise Act, 1944.

Analysis: The refund had been sanctioned with interest, but the amount was directed to be adjusted against an existing arrear demand. In the absence of any appearance or material to displace the finding of the Commissioner (Appeals), the adjustment was held to be justified, since recoverable dues can be set off against refund payable and a litigant cannot retain a refund when an arrear amount remains realizable from him.

Conclusion: The adjustment of the refund against the arrear demand was upheld and the assessee's challenge failed.

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