2015 (6) TMI 622 - HC - Central Excise

Duty demand - Violation of Section 11D - Whether the duty demand made under Section 11D of Central Excise Act, 1944 as made out in the Show Cause Notice is correct or not, inasmuch as duty has been charged on the value as per Section 4 of the Central Excise Act, 1944 and the goods removed on invoices as per Rule 11 of Central Excise Rules, 2002 - Held that - First respondent/assessee were supplying cylinders through open tender to IOCL. They have fixed the price of the cylinder at ₹ 300/-. Even though they were availing SSI exemption, even after crossing the SSI exemption limit, they were supplying the cylinders at the agreed price at ₹ 300/-. They had not collected in excess of the price fixed at NDP by IOCL, which is inclusive of excise duty. It is seen from the order of the Adjudicating Authority that he has not recorded any finding to sustain the demand. The Commissioner (Appeals), after verifying the facts and records and after perusing the statements given before the Central Excise Officers, held that the first respondent/assessee had not collected in excess of over and above what was paid. It is to be noted that the Department had not disputed the eligibility of the SSI exemption availed by the first respondent/assessee and there is no proposal to deny the SSI exemption. When such being the case, because of the error committed by the clerk in generating the invoice, the first respondent/assessee could not be faulted with. In the absence of any intention to collect excess duty, we hold that the first respondent/assessee had not violated the provisions of Section 11D for the Department to invoke the said provision and demand duty. - Decided against Revenue.

Summary

Issues:
1. Interpretation of breakup figures of Excise Duty in invoices under Rule 11 of Central Excise Rules, 2002.
2. Validity of duty demand under Section 11D of Central Excise Act, 1944 based on invoices and statutory documents.

Issue 1 - Interpretation of breakup figures of Excise Duty:
The case involved an appeal by the Department against an order of the Customs, Excise and Service Tax Appellate Tribunal regarding the breakup figures of Excise Duty shown in invoices. The Tribunal and Commissioner (Appeals) found that the assessee, a manufacturer of LPG Cylinders, had not collected excess excise duty and had not violated provisions of Section 11D. The Commissioner (Appeals) highlighted that the assessee's actions were conscious decisions based on legal provisions, and any errors in invoices were unintentional. The Tribunal concurred, emphasizing that the assessee charged the agreed price inclusive of excise duty and did not collect any excess amount. The clerical error in invoice preparation was considered genuine, and the Department's appeal was dismissed due to lack of substantial legal questions.

Issue 2 - Validity of duty demand under Section 11D:
The dispute arose from the Department's claim that the assessee failed to remit excise duty collected from M/s. Indian Oil Corporation Ltd. during a specific period. The Adjudicating Authority confirmed the duty demand under Section 11D, which was challenged by the assessee. The Commissioner (Appeals) and Tribunal both ruled in favor of the assessee, noting that no excess duty was collected beyond the agreed price of the cylinders. The Tribunal highlighted that the invoices' clerical errors did not result in overcharging, and the Department's reliance on case law was deemed inapplicable. The High Court affirmed the Tribunal's decision, emphasizing the absence of any intention to collect excess duty and the eligibility of SSI exemption. The Court concluded that no substantial legal questions arose, confirming the Tribunal's order and dismissing the Department's appeal without costs.