January 30, 2026 : The Ahmedabad Bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that when a duty demand is set aside in its entirety, the assessee is entitled to a refund of the full amount deposited during the course of litigation, and not merely the statutory pre-deposit. The Tribunal further held that refund claims cannot be rejected simply because original TR-6 challans or old bank records are unavailable, especially when self-attested copies of payment documents are produced.

The ruling came in an appeal filed by M/s Faizan Texturising challenging partial rejection of its refund claim by the departmental authorities. The Bench, comprising Dr. Ajaya Krishna Vishvesha (Judicial Member), made it clear that the burden of maintaining records of pre-deposits lies with the department, not the assessee.

The dispute arose from two show cause notices issued to the appellant in March and April 2008, which were confirmed by Orders-in-Original dated 10 March 2014. On appeal, the Tribunal remanded the matter in July 2015. However, in de novo adjudication, the demands were again confirmed in December 2016. The appellant once more approached the Tribunal, which by final orders dated 11 April 2022 set aside the demands in toto and allowed the appeals with consequential relief.

Following this, the appellant filed a refund claim on 26 July 2022 seeking refund of ₹28,60,546, including a pre-deposit of ₹5,94,000 and other amounts deposited during adjudication and appellate proceedings. While processing the claim, the department sanctioned only ₹9,09,153 and rejected the balance ₹19,51,393 on the ground that old TR-6 challans were illegible and could not be verified, as the concerned bank no longer retained records beyond 10 years. Interest under Section 35FF of the Central Excise Act, 1944 was also denied.

On appeal, the Commissioner (Appeals) partly allowed the claim but restricted the refund to amounts equivalent to the 7.5% mandatory pre-deposit under Section 35F. This restriction was challenged before the Tribunal.

Allowing the appeal, the CESTAT held that once the demand itself is quashed completely, the assessee automatically becomes entitled to refund of the entire amount deposited during the litigation. The Tribunal observed that Circular No. 984/08/2014-CX expressly provides that self-attested copies of documents evidencing payment are sufficient for processing refund claims, and insistence on original TR-6 challans is contrary to the circular.

The Bench also noted that the circular mandates departmental authorities to maintain records of pre-deposits to ensure smooth verification at the time of refund. Failure of departmental record-keeping or non-availability of bank records due to expiry of retention periods cannot be used to defeat a legitimate refund claim. Denial of refund solely on the basis that banks do not retain records beyond 10 years was held to be legally unsustainable.

Accordingly, the Tribunal set aside the order of the Commissioner (Appeals) and directed the department to sanction refund of the entire amount of ₹28,60,546 along with applicable interest under Section 35FF of the Central Excise Act, 1944, without any further delay.

Cause Title: M/s. Faizan Texturising vs Commissioner, CGST & Central Excise, Vadodara
Case No.: Excise Appeal No. 10117 of 2024-SM
Coram: Dr. Ajaya Krishna Vishvesha (Judicial Member)