2025 (3) TMI 257 - AT - Central Excise

Court Overturns Department's Rebate Adjustment Due to Pending Demand; Emphasizes Need for Finality in Adjudication Process.

UPL LIMITED Versus COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX-BHARUCH

The court ruled in favor of the appellant, setting aside the department's adjustment of the rebate against the demand. It found that there was no existing ... Challenge to order of adjustment of demand made by the department against the rebate claim which was sanctioned - suo moto adjustment of rebate amount is done - HELD THAT:- The rival submissions have been considered by this court. It finds weight in whatever learned advocate has stated that as on date with the setting aside of the order by the Revisionary Authority, there is no demand which is existing. Appeal allowed. The appellant in this case was aggrieved by the department's adjustment of demand against a rebate claim that had been sanctioned to them. The department had adjusted the rebate amount against the demanded sum, even though the appellant had appealed the demand order to the Commissioner (Appeals) and subsequently to the Revisionary Authority, who remitted the matter back to the adjudicating authority.The advocate for the appellant argued that there was no demand adjudicated against them, let alone a final demand. He relied on the decision in the case of M/s. National Engineering Industries Ltd Vs. CGST Jaipur, where it was held that the department was not entitled to recover an amount through adjustment against a refund when the demand was not finally determined and was sub-judiced before the competent authority.The advocate emphasized that in the cited case, the refund was not allowed to be adjusted until the demand had attained finality and was sub-judiced before the competent authority. He argued that since the matter was still pending before the adjudicating authority as per the remand order, it could not be said that a confirmed demand existed against the appellant.On the other hand, the learned AR contended that the matter was sub-judiced and remanded as per the direction of the Revisionary Authority. He cited various case laws to support the proposition that the department could adjust a refund against a confirmed demand, emphasizing that the mere filing of an appeal did not automatically stay the demands.The court considered the arguments presented by both sides and found merit in the appellant's position. It agreed that with the setting aside of the order by the Revisionary Authority, there was no existing demand as of the current date. Therefore, the court held that the order adjusting the rebate against the demand should be set aside. The court distinguished the judgments cited by the learned AR on the basis of the specific facts of the case.Consequently, the appeals were allowed, and the court dictated and pronounced its decision in open court.