2014 (2) TMI 1092 - AT - Central Excise

Collection of Excise duty from the customers, on account of fluctuation in rates of the petroleum products on the stocks lying at various depots - Demand u/s 11D - assessee being only a dealer and not a manufacturer - Held That - It is clear that the petroleum products being marketed by the appellant depot had been manufactured by various oil companies. We also find that the provisions of Section 11D are applicable only to the person liable to pay the duty who in respect of any goods sold has collected from his customers an amount in excess of duty assessed and paid on the goods. This provision obviously would not be applicable to a dealer who sells the duty paid goods purchased from other manufacturers. The appellant, a HPCL Depot were admittedly selling duty paid petroleum products purchased from different oil companies. Therefore, the provisions of Section 11D are not applicable to the appellant - Decided in favour of assessee.

Summary

Issues involved:
- Applicability of Section 11D of the Central Excise Act, 1944 to a dealer selling duty paid goods purchased from manufacturers.
- Interpretation of the law regarding recovery of excess duty from customers by the appellant.
- Validity of the show cause notice issued to the appellant for recovery of duty amount, interest, and penalty.

Analysis:

1. Applicability of Section 11D:
The appellant, a dealer, operated a storage depot receiving duty paid petroleum products from various oil companies. The allegation was that the appellant sold pre-price increase stock at revised prices, recovering from customers an amount towards excise duty not paid by them. The show cause notice was issued under Section 11D for recovery of a specific amount along with interest and penalty. The Commissioner confirmed the demand and imposed penalties. However, the Tribunal noted that Section 11D applies to persons liable to pay duty who collect excess amounts from customers on goods sold. Since the appellant was a dealer selling duty paid goods purchased from manufacturers, Section 11D was deemed inapplicable, as established in the judgment of the Apex Court in a similar case. Consequently, the impugned order was set aside, and the appeal was allowed.

2. Interpretation of Recovery of Excess Duty:
The Tribunal emphasized that the provisions of Section 11D pertain to individuals who, in relation to goods sold, collect amounts exceeding the duty assessed and paid on those goods. Given that the appellant was not the manufacturer but a dealer selling duty paid petroleum products procured from various oil companies, the Tribunal determined that the appellant did not fall under the purview of Section 11D. This interpretation was supported by the precedent set by the Apex Court in a related case involving a similar scenario. Therefore, the Tribunal concluded that the recovery of excess duty from customers by the appellant did not align with the requirements of Section 11D, further justifying the setting aside of the impugned order.

3. Validity of the Show Cause Notice:
The show cause notice issued to the appellant under Section 11D for the recovery of a specific amount, interest, and penalty was a pivotal aspect of the case. The Commissioner had adjudicated the notice, confirming the demand and imposing penalties. However, the Tribunal, after considering submissions from both sides and examining the records, found that the notice was not sustainable due to the inapplicability of Section 11D to the appellant as a dealer of duty paid goods. By referencing the judgment of the Apex Court and highlighting the nature of the appellant's business operations, the Tribunal deemed the notice invalid and subsequently set it aside, allowing the appeal filed by the appellant.

In conclusion, the Tribunal's detailed analysis and interpretation of the legal provisions, supported by relevant case law, led to the setting aside of the impugned order and the allowance of the appeal, thereby providing clarity on the applicability of Section 11D to dealers selling duty paid goods purchased from manufacturers.