2008 (2) TMI 226 - AT - Central Excise

Appellants collected 10% of price as Central Excise duty from their customers even while availing SSI exemption collection of extra amount as duty from their customers - any amount collected as duty of excise by any person from his buyer but not credited to the Exchequer could be recovered by department without the bar of limitation

Summary

Issues:
Demand under Section 11D r/w Section 11A of the Central Excise Act for unremitted excise duty and penalty imposition under Rule 173Q.

Analysis:
The appeal was filed against a demand of Rs.1,68,322/- under Section 11D r/w Section 11A of the Central Excise Act for the period 1.4.1995 to 6.10.1995 and a penalty of Rs.10,000 imposed under Rule 173Q. The appellants, engaged in soda-makers manufacturing, transferred 70% of their production to the Head Office and sold to dealers. The department alleged the appellants collected 10% excise duty from customers while availing SSI exemption, based on invoices. The Executive Director admitted the collection as a mistake due to a computer program error. The Commissioner issued a show-cause notice seeking recovery under Section 11D r/w Section 11A and proposed a penalty under Rule 173Q, alleging willful suppression of facts. The Addl. Commissioner confirmed the demand and imposed the penalty, upheld by the Commissioner (Appeals), leading to the present appeal.

The appellants contended they did not collect any duty from customers during the disputed period, citing the price consistency post-dispute. The Tribunal rejected this plea, noting the invoices showed duty collection, and no evidence rebutted it. The burden lay on the appellants to prove non-collection, which they failed to do. The appellants' claim that price consistency implied no duty collection was dismissed, as it does not negate passing on the duty incidence to buyers, per established law. Thus, evidence favored the demand under Section 11D.

Regarding the limitation plea, Section 11D lacked a recovery mechanism pre-2000 amendment by the Finance Act. Citing a Madras High Court case, the Tribunal highlighted the distinction between Sections 11A and 11D, precluding recovery under 11A for 11D cases. The Revenue's argument of willful suppression for invoking the extended limitation under Section 11A was rejected. The Tribunal noted legislative intent for unlimited recovery of unremitted duty. Consequently, the demand was deemed enforceable, with no valid challenge against the penalty, leading to dismissal of the appeal.

In conclusion, the demand under Section 11D was upheld as enforceable, with the penalty considered reasonable and the appeal dismissed accordingly.