2003 (12) TMI 530 - AT - Central Excise

Summary

Issues:
- Interpretation of Section 11D of the Central Excise Act, 1944 regarding duty collection during clearance under nil rate
- Applicability of Notification 175/86 dated 1-3-1986 on manufacture of P&P medicaments
- Allegation of duty collection from customers without payment to Revenue

Interpretation of Section 11D:
The case involved the interpretation of Section 11D of the Central Excise Act, 1944, regarding the collection of duty during clearance under a nil rate. The appellants, engaged in manufacturing P&P medicaments, were availing the benefit of Notification 175/86 dated 1-3-1986, resulting in no duty payment for a specific period. The issue arose when the appellants filed a price list with a lower assessable value due to the deduction of the excise duty element. The Revenue alleged that despite collecting the duty from customers, it was not being paid to the Revenue. However, the Assistant Commissioner initially dropped the show cause notice, emphasizing that maintaining the same wholesale price did not imply duty collection from customers during clearance under nil or concessional rates.

Applicability of Notification 175/86:
The appellants' eligibility for the benefit of Notification 175/86 dated 1-3-1986, concerning the manufacture of P&P medicaments, was a crucial aspect of the case. This notification allowed duty exemption for a specified period. The appellants' compliance with the conditions of this notification influenced the duty payment scenario during the relevant period under consideration. The correct interpretation and application of this notification were essential in determining the duty liability of the appellants.

Allegation of Duty Collection:
The issue of alleged duty collection from customers without payment to the Revenue was a significant contention in the case. The Revenue, dissatisfied with the Assistant Commissioner's decision, appealed to the Commissioner (Appeals), who ruled in favor of the Revenue. The appeal was then presented before the Appellate Tribunal. The Tribunal, citing a precedent in the Pitambar Coated Paper Ltd. case, held that during clearance under a nil rate, duty collection from buyers could not be presumed. Consequently, invoking Section 11D of the Central Excise Act, 1944 was deemed inapplicable in such circumstances. The Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellants based on this interpretation.