Stay Refund Amount deposited before SCN was issued under protest Imported goods diverted to said unit in UT CENVAT Credit avail on them Held, no allegation of liability of unit No specific provision in Customs Act which authorizes the Customs Authority to withhold the refund during pendency of appeal before Tribunal Ratio of judgment in Neeraj Newspaper Association (P) Ltd. v. Assistant Collector of Customs, Air Cargo Complex (Import) Calcutta and Ors. Stay operation of order partly, whereby refund claim to be made of half the amount Stay application disposed of 2. The revenue is in appeal against an order passed by the Commissioner (A), Central Excise, Pune on 21.09.2005 who has set aside the Order-in-Original dated 31.03.2005 wherein the demand of Rs. 4,68,566/- (Rupees Four Lakhs Sixty Eight Thousand Five Hundred Sixty Six only) was confirmed against which an amount of Rs. 4.00 Lakhs (Rupees Four Lakhs only) was deposited by the respondent. An equal amount of penalty also imposed apart from interest at appropriate rate. The Department has also filed stay application to stay the operation of the Order of Commissioner (A).
3. The respondents are engaged in the manufacture of goods falling under Chapter 76 of the First schedule to the Central Excise Tariff Act, 1935. The Show-Cause-Notice dated 15.04.04 was issued to the respondents on the ground that they had imported Aluminium scrap which was diverted by them to Dadra Nagar Haveli (UT), and Cenvat credit was availed by them. On the strength of the bill of entry of the imported goods were diverted. On the adjudication of Show-Cause-Notice, amount of refund was confirmed. On filing of an appeal by the respondent, the Commissioner (A) set aside the Order-in-Original. Hence the appeal filed by the Department.
4. The contention of the Department is that the Commissioner (A) has erred in appreciating the evidence on the record as such the order passed is improper and illegal. It also seeks stay of the impugned order on the ground that the respondent may pray for refund of the amount due towards paid duty.
5. The ld. Counsel for the respondent has supported the impugned order stating that the learned Commissioner (A) has rightly rejected and disbelived/alleged letters written by their CHA informing about diversions of the goods, to wreck vengence against the respondent. The Commissioner (A) said to have relied on the evidence on record and account maintained during the manufacturing activity. According to him in the case of this type and keeping in view the financial viability of the unit, the operation of the order to be stayed pending disposal of appeal. He relied upon the following two decisions.
i) Collector of Central Excise, Guntur v. Hindustan Petroleum Corporation Ltd. It is observed that the respondent entitled to refund under the order appealed against, is a firm of good financial standing and also is a Govt. of India undertaking, the amount refunded will not be in jeopardy if appeal is finally decided in favour of Revenue and stay is rejected.Neeraj Newspapers Association (P) Ltd., v. Assistant Collector of Customs, Air Cargo Complex (Import), Calcutta and Ors. It is held that "there is no specific provision in the Customs Act which authorizes the Customs authority to withhold the refund during the pendency of appeal before the Tribunal. Under the Income Tax Act, 1961, a specific provision has been made under Section 241 giving power to the authorities to withhold refund, where an order giving rise to refund is the subject matter of appeal or further proceeding or where any other proceeding under the Act, is pending if the grant of the refund is likely to adversely affect the Revenue. Such refund claim be withheld till such time as the Commissioner may determine.
Having considered the aforesaid parameters and the principle laid down and further having regard to the fact that the respondent has already deposited the sum of Rs. 4.00 Lakhs even before issuing the Show-Cause-Notice under protest and further on consideration that there is no allegation about the viability of the unit, it is felt expedient in order to safeguard the interest of both sides to grant stay of operation of the order to the extent of Rs. 2.00 Lakhs (Rupees Two Lakhs only), so that the respondent may claim the refund of balance of Rs. 2.00 Lakhs (Rupees Two Lakhs). It is undertaken across the bench, that in case if the Department succeeds in appeal, they would deposit the amount. Accordingly, the stay application is disposed off. As both sides agreed an earlier hearing of the appeal is fixed i.e. on 20.03.2006.