2009 (9) TMI 807 - AT - Central Excise

Valuation - It was alleged that the appellants have suppressed the value of product on the invoice at the time of clearance and have recovered the additional amount at later date by way of Commercial Invoice in Form R-1 Series - a demand of ₹ 9,62,033/- was confirmed u/s 11A of CEA, 1944 read with Rule 14 of CCR, 2004 along with interest and equivalent amount of penalty u/s 11AC of CEA, 1944 read with Rule 15 of CCR, 2004 - Held that - the appellants has recovered the total amount against the EOT Cranes was ₹ 10,58,23,702/- and the appellant is liable to reverse the Cenvat credit @ 10% of the total sale proceeds i.e. ₹ 10,58,23,702/- received from the Customers. Further, the demand which has been raised earlier, it cannot be presumed that the department would be aware that in subsequent period also the appellants would be recovering additional amount by separate commercial invoice of the different series. It is clear from the records that if the appellants did not want to suppress the facts, there was no reason to recover the said amount by a separate commercial invoice of a different series rather than the invoice under which the goods were purportedly sold. So, the appellants are liable to pay duty on the amount recovered subsequently through commercial invoices. Appeal dismissed - decided against appellant.

Summary

Issues involved:
Demand under Section 11A of Central Excise Act, 1944 with interest and penalty | Interpretation of Rule 6(3)(b) of Cenvat Credit Rules, 2004 | Recovery of additional amount through commercial invoices | Applicability of Section 11A and Rule 14 of Cenvat Credit Rules | Interpretation of 'price' under Sale of Goods Act, 1930 | Invocation of extended period for demand | Liability for duty on recovered amount | Imposition of penalty under Rule 15 of Cenvat Credit Rules and Section 11AC of Central Excise Act, 1944 | Liability for interest recovery

Analysis:

The appeal involved a demand of Rs. 9,62,033/- under Section 11A of Central Excise Act, 1944, along with interest and penalty, confirmed against the appellants for allegedly suppressing the value of products on invoices and recovering the additional amount later through commercial invoices. The issue revolved around the interpretation of Rule 6(3)(b) of Cenvat Credit Rules, 2004, which required the appellants to reverse an amount equal to 10% of the total price charged from the buyer. The appellants argued that the recovery was not Central Excise duty and could not be demanded under Section 11A or Rule 14 of the Cenvat Credit Rules as the credit was not wrongly taken, utilized, or refunded. They contended that the recovered amount did not form part of the consideration for the sale of goods.

The appellants further challenged the invocation of the extended period for demand, arguing that there was no evidence of fraud, collusion, or intent to evade payment of duty. They emphasized that the recovered amount was a tax collected by the government and not part of the price of goods. The appellants also disputed the imposition of penalty under Rule 15 of Cenvat Credit Rules and Section 11AC of Central Excise Act, 1944, asserting that no penalty could be imposed as there was no wrongful utilization of credit. They contended that interest was not recoverable as there was no amount due.

The Revenue, on the other hand, argued that the recovered amount through commercial invoices formed part of the consideration for the sale of goods, making the appellants liable to pay duty on the 10% of the Cenvat credit reversed on exempted goods. The Tribunal, after examining the submissions, held that the appellants had indeed recovered additional amounts through commercial invoices, making them liable to reverse the Cenvat credit on the total sale proceeds received from customers. The Tribunal upheld the demand, stating that the appellants should pay duty on the subsequently recovered amount through commercial invoices, dismissing the appeal.

In conclusion, the Tribunal found no infirmity in the impugned order and upheld the demand against the appellants. The judgment emphasized the liability of the appellants to pay duty on the recovered amount through commercial invoices and rejected their arguments regarding the interpretation of rules and the imposition of penalties and interest.