2006 (6) TMI 465 - AT - Central Excise

Summary

Issues involved: Interpretation of Section 11D of the Central Excise Act regarding the applicability of money credit scheme u/s Notification No. 45/89-C.E. for the period from 20-9-1991 to 30-9-1994.

Summary:
In the present case, the demand was confirmed on the ground that the Appellants availed money credit under Notification No. 45/89-C.E. for minor oils used in the manufacture of vegetable products. The demand was based on the assertion that the credit taken under the money credit scheme was essentially paper credit, and the duty collected from customers included the portion adjusted against the paper credit. The Appellants were held liable to pay the amount collected from customers as duty u/s 11D of the Central Excise Act. However, both sides acknowledged that the situation was covered in favor of the assessee by Board Circular No. 651/42/2002-CX, dated 7-8-2002, which clarified that the demand of duty under Section 11D in such a scenario is not sustainable.

The Circular emphasized that Section 11D requires a person liable to pay duty to deposit any amount collected in excess of the duty assessed or determined on excisable goods from the buyer, as representing duty of excise. It further clarified that in cases where duty collected has been deposited with the Government, Section 11D shall not apply, even if the money credit available with the manufacturer is utilized to pay duty on finished excisable products and this duty is collected from the buyer. The Circular directed that pending cases should be finalized accordingly.

In light of the Circular's provisions, the impugned order was set aside, and the Appeal was allowed.