By TIOL News Service

MUMBAI, SEPT 21, 2017: AN amount of Rs.15,90,000/- was deposited by the appellant in a case. The Tribunal ordered release of the said amount, however, the Tribunal also imposed a penalty of Rs.10 lakhs on Ishwarlal Lalwani and Rs.1.00 lakh on Suresh Chandra M Jain.

In the matter of the ‘released' amount, the appellant filed a refund claim.

However, the original authority sanctioned refund of Rs.4,90,000/- after appropriating the penalties imposed.

The appellants accepted the appropriation of Rs.10 lakhs against the penalty imposed on the partner of the appellant firm.

However, the appellant did not accept the appropriation of Rs.1.00 lakh against the penalty imposed on Suresh and, therefore, filed an appeal before the Commissioner (Appeals) with an application for condonation of delay. The appeal was rejected on account of limitation as the same was allegedly filed beyond the condonable time limit.

Meanwhile, in a separate proceeding against Suresh, the original adjudicating authority appropriated the amount of Rs.1.00 lakh towards the penalty against refund claim of Rs.5.00 lakh filed by him.

So, the appellant again filed a refund claim for Rs.1.00 lakh on the ground that the said amount of Rs.1.00 lakh has been recovered twice - once by appropriating against the refund claim filed by the appellant and again while by appropriation against refund claim filed by Suresh Kumar.

The appellant pointed out that the refund claim has been rejected on the ground that the appellant failed to challenge the order of appropriation of Rs.1.00 lakh before the Commissioner (Appeals) on time and the said proceedings had attained finality.

It is further submitted that against recovery of Rs.1.00 lakh, Government has recovered Rs.2.00 lakhs and this amounts to unjust enrichment on the part of the Government.

The AR emphasized that since the proceedings relating to appropriation of Rs.1.00 lakh against penalty had attained finality, no refund can be granted against a subsequent application for the same.

The Bench inter alia observed -

+ Revenue has not challenged the fact that the amount of Rs.1.00 lakh have been appropriated twice. Once, against the appellant and another time against the person to whom the penalty was imposed.

+ In the instant case what has attained finality by the order of the Commissioner (Appeals) which upheld the appropriation, is the act of appropriation. The refund, however, arises after the act of appropriation.

+ The appellants have been able to successfully establish that the duty has been appropriated twice.

+ In these circumstances, the refund claim filed for the penalty wrongly appropriated is an independent proceedings and cannot be linked with the earlier proceedings wherein the said penalty was appropriated.

The impugned order was set aside and the matter was remanded to the original adjudicating authority.

(See 2017-TIOL-3421-CESTAT-MUM)