2015 (9) TMI 569 - AT - Central Excise

Duty demand u/s 11D - sale of goods as inclusive of duty - according to the revenue, in such cases appellant is deemed to have collected excise duty from their customers and hence are liable to deposit the same under the provisions of Section 11D of Central Excise Act, 1944. - Held that - Appellant is only trading in the goods under dispute. They are selling the goods at price fixed by NPPA. Further they are purchasing the same goods from the manufacture at the price fixed by NPPA with a discount of 12% or 26.5%. Prices are composite one and there is no separate indication of excise duty in the invoices either of appellant or loan licencee - appellant is not the manufacturer of the goods and has not paid any excise duty. They are only trading and working with the profit on the discount extended by the manufacturer on the price fixed by NPPA. We also find strength in the submission of the ld. counsel for the appellant that if at all there has to be any liability to pay any amount under section 11D it will be with the manufacturer of the goods and not with them in the facts and circumstances of the case. - Decided in favour of assessee.

Summary

Issues:
1. Whether the appellant is liable to deposit excise duty under Section 11D of the Central Excise Act, 1944 for traded goods.

Analysis:
The case involved a Government of India undertaking engaged in both manufacturing and trading of medicaments. The appellant procured medicines from loan licensees at a discount and sold them at prices fixed by the NPPA under the DPCO. The revenue contended that as the appellant sometimes sourced goods from units not liable to excise duty, they were deemed to have collected excise duty from customers and were thus obligated to deposit it under Section 11D.

The appellant argued that they were not manufacturers for excise purposes but traders, and the loan licensees were responsible for manufacturing. They emphasized that the prices were composite, with no separate indication of excise duty in invoices. Citing precedent cases, the appellant asserted that any extra duty, if applicable, should be collected from the actual manufacturer or loan licensee, not them.

The Additional Commissioner reiterated that the NPPA prices factored in excise duty, and as the appellant recovered amounts equivalent to these prices, they had effectively collected excise duty and were liable to deposit it under Section 11D. However, the Tribunal found that the appellant was only trading the goods, selling them at NPPA-fixed prices and purchasing them at discounts, without indicating excise duty separately in invoices.

Relying on the Tribunal's previous decision in the Hindustan Petroleum Corporation Ltd. case, the Tribunal concluded that Section 11D did not apply in the present scenario. They noted that no amount representing excise duty was collected from buyers, and as the appellant was not the manufacturer and had not paid excise duty, any liability under Section 11D, if applicable, would rest with the manufacturer, not the appellant. Consequently, the appeal was allowed, and the appellant was not required to deposit excise duty under Section 11D.