2015 (1) TMI 1129 - AT - Central Excise

Duty demand u/s 11D - unit is situated in duty exemption zone - revenue argued that since the price includes excise duty, the appellant is recovering this element of duty through the pricing mechanism. - Interest u/s 11DD - Held that - In the present case from the invoice raised by the appellant, it is seen that there is no mention of any collection of any amount as representing excise duty and it is the composite price fixed by the NPPA which has been indicated. This Tribunal had occasion to consider an identical matter in the case of IOCL (2015 (1) TMI 815 - CESTAT CHENNAI) wherein it was held that when a composite price under the administered pricing mechanism has been charged from the buyers under relevant invoices and no amount representing the same as duty of excise has been charged from the buyers, the necessary ingredients of Section 11D are not satisfied. In view of the above position, we are of the considered view that the appellant has made out a prima facie case for grant of stay. Accordingly, we grant unconditional waiver from pre-deposit of dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal. - Stay granted.

Summary

Issues:
- Duty demand confirmation against M/s. Hindustan Antibiotics Ltd.
- Interpretation of Section 11D(1A) of the Central Excise Act.
- Liability of the appellant to pay excise duty.
- Applicability of the decision in the case of IOCL.
- Grant of stay petition.

Detailed Analysis:

1. Duty Demand Confirmation: The appeal and stay petition were filed against the order confirming a duty demand of Rs. 1,02,74,703 against M/s. Hindustan Antibiotics Ltd. under Section 11D(3) of the Central Excise Act, 1944, along with interest under Section 11DD. The appellant contested this demand, arguing that they are not the manufacturers but suppliers of specified medicines to Government hospitals at prices fixed by the NPPA under DPCO, 1995. They procured medicines from various manufacturers, some in duty exempt zones, and supplied them to hospitals. The Revenue contended that since the price includes excise duty for medicines from duty exempt zones, the appellant is recovering duty through pricing, thus liable to pay excise duty.

2. Interpretation of Section 11D(1A): The Tribunal analyzed Section 11D(1A) which requires any person collecting excess duty or duty on wholly exempt goods to pay it to the Central Government. The appellant argued that they did not collect any amount representing excise duty separately but charged a composite price set by the NPPA. Citing a previous case involving IOCL, the Tribunal held that if no excise duty amount is separately charged from buyers, the requirements of Section 11D are not met. Consequently, the Tribunal found that the appellant did not satisfy the conditions of Section 11D(1A).

3. Liability of the Appellant: The appellant's liability to pay excise duty was a key issue. The appellant contended that since they did not collect any excise duty separately from buyers and charged a composite price, they should not be held liable to pay excise duty. The Revenue argued that buyers would assume the medicines were manufactured by the appellant and that excise duty had been discharged. However, the Tribunal found that the absence of a separate excise duty collection on invoices indicated that the appellant did not have a duty liability.

4. Applicability of IOCL Decision: The appellant relied on a decision involving IOCL to support their case. The Tribunal referred to this case to establish that when a composite price is charged under administered pricing mechanisms without a separate excise duty amount collected, the requirements of Section 11D are not fulfilled. This precedent was crucial in determining the appellant's liability and the grant of stay.

5. Grant of Stay Petition: After considering both parties' submissions and the legal provisions, the Tribunal granted an unconditional waiver from pre-deposit of dues against the appellant and stayed the recovery during the appeal's pendency. This decision was based on the finding that the appellant had made a prima facie case for the stay, as they did not meet the conditions of Section 11D(1A) regarding excise duty collection.

This detailed analysis of the judgment highlights the legal intricacies involved in the case, focusing on the interpretation of statutory provisions, previous case law, and the specific circumstances of the appellant's situation.