2002 (8) TMI 502 - AT - Central Excise

Duty - Collection and deposition with Government - Valuation - Remand - Proof - Demand - Penalty

Issues Involved:
1. Whether the appellant collected duty twice by including it in the price and showing it separately on invoices.
2. Whether the appellant was entitled to deduct excise duty as abatement.
3. Whether the larger period of limitation under Section 11D of the Central Excise Act, 1944, could be invoked.
4. Whether the penalty under Rule 173Q of the Central Excise Rules, 1944, was justified.
5. Whether the demand was barred by limitation.
6. Whether Section 11D of the Central Excise Act, 1944, was enforceable.

Issue-Wise Detailed Analysis:

1. Collection of Duty Twice:
The appellant was accused of collecting duty twice: once by including it in the price and again by showing the excise duty amount separately on invoices. The show cause notices alleged that the value adopted for duty purposes was the price quoted in the tender/purchase order, which was inclusive of Central Excise duty. The department claimed that the appellant had collected Central Excise duty on the cum-duty price mentioned in the tender/purchase order price. The Commissioner confirmed that the appellant collected duty twice and did not pay the excess amount to the Central Government, thus violating Section 11D of the Central Excise Act, 1944.

2. Deduction of Excise Duty as Abatement:
The appellant contended that the abatement towards excise duty was wrongly described as a discount and that they were entitled to deduct excise duty payable under Section 4(4)(d)(I) of the Central Excise Act, 1944. The Commissioner rejected this argument, stating that neither discount nor abatement of Central Excise duty is allowed under the law. The Tribunal found that the appellant had used a formula to work out the assessable value and thereafter the duty, which did not have the approval of law laid down by the Supreme Court.

3. Larger Period of Limitation:
The appellant argued that Section 11D is subject to Section 11A and that the entire demand was barred by limitation. The Commissioner, however, held that the appellant was fully aware that the value given in the tender/purchase order was inclusive of Central Excise duty and did not inform the department, thus suppressing facts and evading duty. Therefore, the larger period of limitation was justified.

4. Penalty under Rule 173Q:
The Commissioner imposed a penalty of Rs. 20 lakhs under Rule 173Q(1) of the Central Excise Rules, 1944, for contravening Rule 173C(3A). The Tribunal found no evidence of collection of any amount in excess of the excise duty on the invoice and stated that there was no case for making a demand under Section 11D. Consequently, the Tribunal found no reason to uphold the penalty under Rule 173Q, as it was not applicable for contraventions of Section 11D.

5. Demand Barred by Limitation:
The appellant contended that the demand was barred by limitation. The Commissioner rejected this, stating that the appellant suppressed facts with the intention of evading duty. The Tribunal found that there was a short-payment of Rs. 767.23 over five years due to the use of an incorrect formula, but no demand was made under Section 11A. Therefore, while acknowledging the short-payment, the Tribunal could not direct its payment.

6. Enforceability of Section 11D:
The appellant argued that Section 11D had been held unenforceable by the Hon'ble Madras High Court. The Commissioner did not address this argument in detail. The Tribunal did not find any amount collected that required deposit under Section 11D and thus found no reason to uphold the penalty under Rule 173Q.

Conclusion:
The Tribunal found no evidence of duty collection in excess of the invoiced amount and no basis for the demand under Section 11D. The penalty under Rule 173Q was also found to be unjustified. The Tribunal remanded the matter to the Commissioner to re-determine the duty payable using the formula laid down by the Supreme Court in the MRF case and to consider the calculations provided by the appellant. The appeal was disposed of accordingly.

← Previous Next →