2014 (8) TMI 89 - AT - Central Excise

Collection of duty while availing SSI Exemption - Demand u/s 11D - The main allegation of the department is that the respondent realized the duty from IOCL but not deposited the same with the department. - Held that - It is not a case here that respondent have collected in excess of excise duty over and above what was paid. - as per the contract, IOCL paid only fixed amount of ₹ 300/- per cylinder as per their approved NDP rate and nothing extra irrespective of the fact whether the respondents are availing SSI exemption or clearing on payment of duty. The only lapse on the part of the respondent is while opting for SSI exemption from 1.4.2005, the computer generated invoices continued to indicate the excise duty, ie. from 1.4.2005 to 14.5.2005. - the respondent has not collected any excess amount over and above the price of the cylinder which is fixed at NDP by IOCL which is inclusive of excise duty. The respondent had charged only ₹ 300/- while availing the exemption and continued to charge ₹ 300/- even after crossing the exemption limit. The clerical error, in the consolidated invoices showing break up of excise duty appears to be genuine as the revenue has not disputed the eligibility of SSI exemption. - Demand was rightly set aside - Decided against the revenue.

Summary

Issues:
- Appeal against Order-in-Appeal No. 53 & 57/2008 passed by the Commissioner (Appeals)
- Demand of Central Excise duty under Section 11D
- Imposition of penalty under Rule 27 and Rule 26 of Central Excise Rules, 2002
- Allegation of duty realization but non-deposit by the respondent
- Admissibility of SSI exemption under Notification 8/03
- Mistake in invoices generated by the respondent
- Contractual terms with IOCL for LPG cylinder supply
- Issue of clerical error in invoices indicating excise duty
- Application of relevant case laws

Analysis:

The Revenue filed an appeal against the Order-in-Appeal passed by the Commissioner (Appeals), challenging the demand of Central Excise duty under Section 11D against the respondent. The case revolved around the respondent's availing of SSI exemption under Notification 8/03 for the financial year 2005-06 and the subsequent demand raised by the department for allegedly collecting excise duty from M/s. IOCL during a specific period. The adjudicating authority confirmed the demand and imposed penalties under Rule 27 and Rule 26 of Central Excise Rules, 2002 against the respondent's partner.

The respondent, in their defense, argued that while they indeed collected excise duty from IOCL, they did not deposit the same due to a clerical error in the invoices generated during the period in question. The respondent contended that they adhered to the contractual terms with IOCL, supplying LPG cylinders at a fixed price per cylinder as per the Net Delivery Price (NDP) finalized by IOCL. The respondent highlighted that the error in the invoices was unintentional, as their staff failed to correct the invoices after re-opting for SSI exemption at the beginning of the financial year.

Upon hearing both sides and examining the records, the judge noted that the main issue was the non-deposit of duty collected from IOCL by the respondent. However, it was established that the respondent did not collect any excess amount beyond the fixed price per cylinder, inclusive of excise duty, as per the contract with IOCL. The judge found that the respondent's error in continuing to show excise duty in the invoices post-reopting for SSI exemption was a genuine clerical mistake, considering there was no dispute regarding the eligibility of the exemption.

Consequently, the judge upheld the Order-in-Appeal passed by the Commissioner (Appeals), dismissing the Revenue's appeal. The judge concluded that since the respondent did not collect any additional amount beyond the agreed price, the demand raised under Section 11D was unwarranted, and the penalties imposed were deemed inappropriate given the circumstances. The judge also clarified that the case law cited by the Revenue was not applicable to the present scenario, further solidifying the decision in favor of the respondent.