2013 (4) TMI 105 - HC - Central Excise

Deposit of duty in Government s account U/s 11D - It was noticed that the respondent has collected the full excise duty from the customers(Availing Notification No. 130/83-CE and 132/83-CE ), but has not deposited the full amount as under the Government Order it was entitled to deposit the concessional amount - Held that - The controversy involved in this Reference is covered by the judgment of Supreme Court in Kisan Sahakari Chini Mills Ltd. vs. Collector of Central Excise, Allahabad(2005 (3) TMI 124 - SUPREME COURT OF INDIA ), in which the Supreme Court has held that under the incentive scheme, exemption of excise duty at the concessional rate has been granted to the assessee, but the Government Order does not permit the assessee to collect more than what they have to pay to the Government under the scheme. If the assessee has collected excess excise duty, then it is bound to deposit such excess amount in view of the provisions of Section 11D of the Central Excise Act Since the controversy has already been decided by the Supreme Court - Accordingly, this Reference is fully covered by the judgment of the Supreme Court. We hold that the applicant/manufacturer is liable to deposit the entire sum collected as duty from the purchasers and cannot be permitted to retain the differential amount of duty, i.e. the difference in between the normal rate of duty and concessional rate - Reference is answered in against the assessee and in favour of the Department.

Summary

Issues:
1. Interpretation of Section 11D of the Central Excise Act regarding the enforcement of Notification Nos. 130/83-CE and 132/83-CE.
2. Applicability of Section 11D based on unjust enrichment to government incentive schemes allowing retention of differential amounts.

Analysis:
The High Court of Allahabad was presented with a reference from the Customs, Excise and Gold Control Appellate Tribunal regarding the interpretation of Section 11D of the Central Excise Act in relation to Notification Nos. 130/83-CE and 132/83-CE. The case involved M/s. Kisan Sahakari Chini Mills Ltd., which had claimed exemption under the government order dated 27.4.1983 for excise duty on sugar production. However, it was found that the company had collected the full excise duty from customers but had not deposited the full amount entitled under the government order. The adjudicatory authority held that the company was liable to deposit the excess amount under Section 11D. This decision was upheld in subsequent appeals leading to the reference before the High Court.

The key question before the court was whether the company could retain the excess excise duty collected or if it was obligated to deposit the full amount under Section 11D. The court referred to a Supreme Court judgment in a similar case, which held that if an assessee collects excess excise duty under an incentive scheme, they are bound to deposit the surplus amount in accordance with Section 11D. The court emphasized that the government order did not permit the company to retain more than what was due under the scheme. Therefore, the court ruled that the manufacturer must deposit the entire sum collected as duty from purchasers and cannot retain the differential amount between normal and concessional rates.

In conclusion, the High Court answered the reference in the negative, against the assessee and in favor of the Department, affirming that the manufacturer was liable to deposit the full excise duty collected from customers as per the provisions of Section 11D of the Central Excise Act.