2010 (9) TMI 288 - AT - Central Excise

Demand/Recovery Differential duty - Excise duty charged/collected by assessee from their customers were not specifically mentioned - invoices raised do not represent any amount collected as duty of Excise - the provisions of Section 11D are applicable only to that amount which stands collected by the assessee from their customers by representing the same as duty of Excise invoices do not represent any amount collected as duty of Excise, the provisions of Section 11D are not applicable demand set aside

Summary

Issues Involved:
1. Differential duty on cement cleared in loose and bagged conditions.
2. Application of Section 11D of the Central Excise Act, 1944.
3. Validity of commercial invoices reflecting excess duty.
4. Confirmation of demand based on assumptions of similar software usage.

Detailed Analysis:

1. Differential Duty on Cement Cleared in Loose and Bagged Conditions:
The appellants are engaged in the manufacture of cement and cement clinkers. Cement cleared in bagged condition attracts a specific excise duty of Rs. 350/- PMT, while cement cleared in loose condition for further packing at bagging plants is subject to a concessional rate of Rs. 332/- PMT, as per Notification No. 15/99-C.E., dated 26-3-99. The appellants claimed that the difference of Rs. 18/- PMT is due to the Modvat Credit available on the bags used in their factory.

2. Application of Section 11D of the Central Excise Act, 1944:
Section 11D mandates that any excess amount collected as duty of excise must be credited to the Central Government. The revenue argued that the appellants collected Rs. 350/- PMT as excise duty from customers but only paid Rs. 332/- PMT to the government, thus requiring the differential amount of Rs. 18/- PMT to be paid to the government. The appellants contended that the excess amount was due to a computer error in the commercial invoices and not an intentional collection of excess duty.

3. Validity of Commercial Invoices Reflecting Excess Duty:
The appellants' commercial invoices from the Magdalla plant showed Rs. 350/- PMT as excise duty, although they paid Rs. 332/- PMT. The tribunal noted that the provisions of Section 11D are clear and unambiguous, requiring any excess amount collected as excise duty to be credited to the government. The appellants' argument that the excess amount was due to legislative intent to levy less duty on loose cement was not accepted. The tribunal upheld the demand of Rs. 10,92,639/- for the Magdalla plant.

4. Confirmation of Demand Based on Assumptions of Similar Software Usage:
For the Navi Mumbai and Mangalore plants, the revenue issued show cause notices based on the pattern observed at the Magdalla plant. However, the commercial invoices from these plants did not explicitly mention the duty rate, only stating that the price included excise duty. The tribunal found no merit in the assumption that the same software system used at all plants implied similar errors. Since the invoices from Navi Mumbai and Mangalore did not represent any amount collected as excise duty, the provisions of Section 11D were not applicable. The demand of Rs. 1,86,58,770/- for these plants was set aside.

Conclusion:
- The appeal concerning the Magdalla plant (Appeal No. E/1265/2006) was rejected, and the demand of Rs. 10,92,639/- was upheld.
- The appeal concerning the Navi Mumbai and Mangalore plants (Appeal No. E/1264/2006) was allowed, and the demand of Rs. 1,86,58,770/- was set aside.