2012 (4) TMI 525 - AT - Central Excise

Duty demand under Section 11D read with Section 11A - Held that - The act of such manufacture which attracts the provisions of this sub-section is recovering any amount from the buyer of the goods in any manner as representing duty of excise, which is in excess of the duty assessed and paid and in such a circumstances, the excess amount recovered from the customers as representing excise duty is required to be paid forthwith to the Government. For this purpose, it is not material whether the goods are sold from the factory gate or are cleared on payment of duty from the factory and are sold from the depots or consignment agent s premises or any other premises. Show cause notice itself mentions that the 6326120 litres of HSD in respect of which the appellant are alleged to have recovered an amount of Rs. 66,73,108/- as representing excise duty in excess of the duty actually paid, had been received from Koyali and Manmad. The show cause notice also refers to letter dated 15-2-2000 from Manager (Finance) of the appellant to Superintendent (Preventive), Division-I, Bhopal. A perusal of this letter shows that the HSD, in question, had been received from IOC Koyali and Manmad terminal of BPCL. Since it is IOCL, Koyali and BPCL, Manmad which had cleared the pre-budget stock of HSD, in question, on payments of duty at pre-budget rates, the appellant cannot be treated as the person liable to pay the duty in respect of the HSD, in question, and hence, the provisions of Section 11D(1) would not be applicable to them - Decided in favour of assessee.

Summary

Issues:
- Applicability of Section 11D of the Central Excise Act, 1944 to a public sector company engaged in manufacturing and marketing of petroleum products.
- Interpretation of the provisions of Section 11D regarding the liability to pay duty and collection of excess amount representing excise duty.
- Determination of whether the appellant is liable to pay the additional excise duty and basic excise duty on the High Speed Diesel (HSD) sold post-budget price.
- Consideration of the time limitation for raising demands under Section 11D of the Central Excise Act, 1944.
- Examination of the relevance of the judgment in the case of C.C.E., Meerut v. Bharat Petroleum Corporation Ltd. in the present context.

Analysis:

The judgment by the Appellate Tribunal CESTAT NEW DELHI involved a dispute concerning a public sector company's depot at Bhopal regarding the collection of additional excise duty (AED) and basic excise duty (BED) on High Speed Diesel (HSD) sold post-budget price. The appellant argued that since the invoices issued to buyers showed a consolidated price, no amount representing excise duty was collected from customers, thus contending that Section 11D of the Central Excise Act, 1944 was not applicable. Furthermore, the appellant asserted that they were not the person liable to pay duty as the HSD in question had been received from other entities who had already paid duty on the goods. The appellant also raised the issue of time limitation for raising demands under Section 11D, citing relevant judgments to support their position.

The Appellate Tribunal analyzed the provisions of Section 11D(1) of the Central Excise Act, 1944, which applies to a person liable to pay duty on excisable goods and who has paid the duty assessed or determined on such goods. The Tribunal emphasized that the person liable to pay duty under this section is typically the manufacturer of the goods. It was clarified that if a customer sells goods to another party and charges an amount representing excise duty in excess of what was paid by the manufacturer, Section 11D(1) does not apply to the customer. Referring to the judgment in the case of C.C.E., Meerut v. Bharat Petroleum Corporation Ltd., the Tribunal highlighted that Section 11D is intended for the person who is liable to pay excise duty and has paid the assessed duty on the goods.

In the present case, the Tribunal noted that the HSD in question had been received from other entities who had cleared the pre-budget stock and paid duty at pre-budget rates. Therefore, the appellant could not be considered the person liable to pay duty on the HSD, and consequently, the provisions of Section 11D(1) were deemed inapplicable to them. The Tribunal concluded that the impugned order demanding the payment of additional excise duty and basic excise duty from the appellant was contrary to the provisions of Section 11D(1) and therefore set aside the order, allowing the appeal.

In summary, the judgment delves into the intricacies of Section 11D of the Central Excise Act, 1944, and clarifies the applicability of the provision to the liability of paying excise duty on goods. The Tribunal's analysis highlights the importance of understanding the roles of different parties involved in the supply chain and emphasizes the necessity for the person liable to pay duty to have paid the assessed duty on the goods in question.