2013 (10) TMI 945 - AT - Central Excise

Nature of amount collected from the customers against reversal of Cenvat Credit / Modvat Credit on Exempted goods - Deposits under Rule 57CC - Excise duty OR not - Appellant has cleared exempted products manufactured out of the common inputs by paying 8% of the amount as provided under Rule 57CC of the erstwhile Central Excise Rule - Revenue is of the view that appellant could not have recovered the amount of such debit from his clients Held that - The real identity of the amount collected (whether excise duty payable or not) is of no relevance for Section 11D - What is relevant is only whether the collection was represented as duty of excise - The representation may as well be entirely false - The qualifying of the representation through the words in any manner makes this clear - the contentions of both sides on the question, as to whether deposits under Rule 57CC are excise duty or not, are beside the point Relying upon COMMISSIONER OF CUSTOMS (IMPORTS), NHAVA SHEVA Versus AJAY EXPORTS 2008 (2) TMI 347 - CESTAT MUMBAI - the appellant had paid and collected the amount as excise duty - the appellant never indicated the amount paid by them as excise duty order set aside Decided in favour of Assessee.

Summary

Issues:
- Appellant availed modvat credit on inputs for manufacturing generic and P.P. medicines
- Appellant debited 8% of price under Rule 57CC for exempted generic medicines
- Show cause notices issued for collecting amount against clearance of exempted medicines
- Adjudicating authority confirmed demand under Section 11D of Central Excise Act, 1944
- Appeals filed by appellant rejected by first appellate authority
- Dispute regarding collection of 8% amount from buyers as Central Excise duty
- Reference to Larger Bench decision in Unison Metals Limited case
- Department's argument on invoices and collection representation
- Appellant's argument on issue distinction from High Court case
- Tribunal's analysis of Unison Metals Limited case and Mafatlal Industries judgment
- Tribunal's conclusion on applicability of Section 11D and Larger Bench decision
- Distinction made from High Court judgment in Inductotherm India Private Limited case

Analysis:
The judgment by Appellate Tribunal CESTAT AHMEDABAD involves appeals against an order regarding the appellant's availing of modvat credit on inputs for manufacturing generic and P.P. medicines. The appellant debited 8% of the price under Rule 57CC for exempted generic medicines, leading to show cause notices for collecting amounts against clearance of exempted medicines. The adjudicating authority confirmed the demand under Section 11D of the Central Excise Act, 1944, which the first appellate authority upheld by rejecting the appeals. The dispute centered on whether the appellant collected 8% amount from buyers as Central Excise duty, with reference made to the Larger Bench decision in the Unison Metals Limited case.

The department argued based on the invoices and collection representation, contending that the appellant indicated the collection as excise duty improperly. The appellant distinguished the issue from a High Court case, emphasizing the distinction in facts. The Tribunal analyzed the Unison Metals Limited case and the Mafatlal Industries judgment to determine the applicability of Section 11D and the Larger Bench decision. It concluded that the appellant's case aligned with the decision in Unison Metals Limited, where the collection was not retained by the assessee, rendering Section 11D inapplicable.

Moreover, the Tribunal highlighted the difference in facts from the High Court judgment in the Inductotherm India Private Limited case, indicating that the appellant did not represent the amount as excise duty. Ultimately, the impugned orders were set aside, and the appeals were allowed based on the Tribunal's interpretation and application of relevant legal principles and precedents.