2015 (9) TMI 248 - AT - Central Excise

Duty demand u/s 11D - Manufacturing and sale of exempted goods where as per the agreement the price is inclusive of duty of excise - As per the appellants, the said mentioning of excise duty in the invoice so generated by them from the computer was on account of the software installed by them, which also reflected the excise duty as they were manufacturing goods and were paying excise duty. Otherwise, the element of excise duty as mentioned in the invoice was not added in the total cost of the medicines and the said amount was not being recovered by them their customers in excess of the value of the consignment of medicines covered in the invoice. Held that - when admittedly the price fixed by DPCO is inclusive of excise duty as was the case in the matter of Hindustan Antibiotics Ltd. (2015 (1) TMI 1129 - CESTAT MUMBAI), as it is the same unit price fixed by DPCO which stands recovered by the appellants from their customers, the fact of reflection of separate duty element in the invoice, which does not stands collected from their customers will not make difference between the present case and the decision of the Tribunal in Hindustan Antibiotics Ltd. (supra). Accordingly, by following the above decision of the Tribunal, we are of the view that the appellant is entitled to unconditional stay - Stay granted.

Issues:
1. Demand raised against the appellant under Section 11D of the Central Excise Act for alleged recovery of excise duty from customers.
2. Appellant's contention regarding the inclusion of excise duty in invoices due to software error.
3. Comparison with a previous Tribunal decision involving a similar situation.
4. Analysis of legal provisions under Section 11D and exemption notification.
5. Consideration of limitation period for the demand raised.
6. Public Sector Enterprise status and entitlement to waiver of pre-deposit and stay against recovery.

Analysis:

1. The main issue in this case revolves around a demand of over Rs. 5.17 crores raised against the appellant under Section 11D of the Central Excise Act. The allegation is that the appellant recovered excise duty from customers, which was not paid to the exchequer due to the area-based exemption notification enjoyed by the manufacturers located in Himachal Pradesh.

2. The appellant explained that the mentioning of excise duty in the invoices was due to a software error, and no extra amount on the excise duty element reflected in the invoice was added to the total value of the goods sold. The appellant contended that the excise duty element mentioned in the invoice was not collected from customers in excess of the value of the medicines.

3. The Tribunal referred to a previous decision involving a similar situation where it was held that if the price fixed by the Drugs Price Control Order (DPCO) includes excise duty and no extra amount is collected from customers, Section 11D does not apply. The Tribunal granted stay in that case.

4. Section 11D (1A) of the Central Excise Act was analyzed, which requires payment to the government if any amount is collected in excess of the duty assessed or determined. The appellant's case involved a situation where the manufacturers did not pay excise duty, and the invoices showed the excise duty element, leading to the conclusion that the amount collected included excise duty.

5. The issue of the limitation period for the demand raised was raised, as the show-cause notice was issued beyond the normal period of limitation. The Tribunal emphasized the need for detailed verification of facts and consideration of legal issues and judicial pronouncements.

6. Considering the appellant's status as a Public Sector Enterprise and the contentious nature of the issue, the Tribunal granted complete waiver of pre-deposit and stay against recovery during the pendency of the appeals. The decision highlighted the need for a comprehensive examination of facts and legal history related to Section 11D before holding the appellants liable.

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