By Puloma Dalal, Jayesh Gogri, Mandar telang Chartered Accountants
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Sanctioned refund cannot be adjusted against unconfirmed demand.
Facts:
The Appellant was given a SCN proposing rejection of refund claim. Thereafter, a corrigendum was issued to the effect that CENVAT Credit on capital goods was also liable to be rejected as it was availed based on a document issued by their Head Office which was not a registered dealer. Ultimately, refund was sanctioned of excess amount paid after deducting CENVAT Credit claimed on capital goods. Commissioner (Appeals) also upheld such adjustment of unconfirmed demand. Accordingly, present appeal was made before Tribunal.
Held:
Tribunal observed that the Assistant Commissioner had sanctioned entire refund claim and thereafter, deducted unconfirmed demand. Further, no Show Cause Notice was issued for inadmissibility of CENVAT Credit. The corrigendum could not take colour of a SCN u/s. 73 of the Finance Act, 1994 since it is neither mentioned that it was issued u/s. 73 nor did it contain any grounds to state that the demand was not hit by time bar. It merely stated that the said amount appeared to be not admissible and straightaway called upon to show cause as to why the refund claim should not be rejected.
Accordingly, the Tribunal held that confirmed demand can be adjusted from refund amount but there was no legal authority to adjust unconfirmed demand from refund amount.
