By TIOL News Service

MUMBAI, APRIL 23, 2018: THE appellant, a merchant exporter, purchased batteries from M/s Union Batteries Pvt. Ltd and exported the same.

Consequent upon export, they applied for rebate of the Central Excise duty paid by M/s Union Batteries Pvt. Ltd. and which was sanctioned but appropriated towards service tax dues of M/s Union Batteries Pvt. Ltd.

An appeal preferred before the Commissioner(A) was without any success.

In appeal before the CESTAT, the appellant referred to the provisions of Section 11 of the CEA, 1944 and submitted that the said section will not apply to the case in hand as the appellant is a different entity and there is no relation between them and M/s Union Batteries Pvt. Ltd and as a merchant exporter, having exported the goods, they are entitled for the rebate of the amount which is due to them in cash.

The AR supported the order of the lower authorities.

After reproducing the provisions of section 11 of the CEA, 1944, the Bench observed that the same contemplates recovery/adjustment/appropriation of the amounts which are due to the Government from the person against whom duty liability is confirmed and due to government. Furthermore, it was undisputed that the appellant herein is a merchant exporter and purchased batteries from M/s Union Batteries Pvt Ltd and claimed rebate of the Central Excise duty paid by Union Batteries Pvt Ltd ; that there are no dues to government from the appellant herein.

It was, therefore, held -

“8. Both the lower authorities have misconstrued the provisions of Section 11 of the Central Excise Act, 1944, as there is nothing on record to show that the appellant had not paid M/s Union Batteries Pvt. Ltd, consideration for the purchase of batteries nor is anything brought on record of any recovery pending from appellant. In my view the amount of rebate which is sanctioned to appellant cannot be appropriated by the authorities by invoking the provisions of Section 11, more specifically when the dues are from totally a different entity M/s Union Batteries Pvt. Ltd…"

Terming the order as unsustainable, the same was set aside with a direction to the lower authorities to refund the amount in cash to the appellant.

The Appeal was allowed.

(See 2018-TIOL-1305-CESTAT-MUM)