2005 (6) TMI 344 - AT - Central Excise

Summary

Issues:
1. Recovery of excise duty under Section 11D of the Central Excise Act, 1944.
2. Applicability of Section 11D in cases where duty collected from buyers has been paid to the Government.
3. Interpretation of invoices bearing a rubber stamp indicating reversal of Modvat.
4. Claiming credit for inputs when no duty is payable on final products.
5. Invocation of Section 11D based on recovery of excise duty from customers.
6. Consideration of pending issues before a Larger Bench for stay application.

Analysis:
1. The appeal was filed against an order directing recovery of excise duty under Section 11D of the Central Excise Act, 1944. The Commissioner had ordered the recovery of a specific amount from the appellant, which included a penalty. The appellant sought a stay of the order, arguing that the provisions of Section 11D did not apply in their case as the duty had already been paid at the time of clearance of Lay Flat Tubing.

2. The appellant contended that the amount collected from buyers had been paid to the Government, and therefore, Section 11D should not be invoked. They highlighted that a rubber stamp on the invoices indicated the reversal of Modvat, suggesting that the amount was not collected as excise duty. The issue of invoking Section 11D in such cases had been referred to a Larger Bench for clarification.

3. The invoices in question bore a rubber stamp stating "Amount reversed u/r 57AD Modvat not to be taken." However, it was unclear when this stamp was applied. Despite the stamp, the invoices clearly showed the charge of 8% excise duty, with calculations and mentions of excise duty amounts. The appellant's claim of nil duty on final products did not negate the fact that excise duty had been charged to customers, leading to the potential application of Section 11D.

4. The appellant's argument that nil duty on final products precluded claiming credit for inputs was deemed a separate issue. The critical consideration was whether excise duty had been charged on the invoices, regardless of the entitlement to input credit. The recovery of excise duty from customers indicated the possible invocation of Section 11D, irrespective of the Modvat reversal claim or pending issues before a Larger Bench.

5. The Tribunal found that the appellant had indeed recovered amounts as excise duty from customers, as evident from the nature of the invoices. The fact that no excise duty was payable did not negate the charging of duty by the appellant. The pendency of similar issues before a Larger Bench was not sufficient grounds for a stay, and the appellant failed to establish a prima facie case for interim relief, leading to the rejection of the stay application.

6. The Tribunal disposed of the application accordingly, setting a deadline for the appellant to deposit the amount in question. Failure to comply would result in the dismissal of the appeal. The decision was dictated and pronounced in open court, concluding the judgment.