2007 (9) TMI 232 - AT - Central Excise

Price variation clause payment of duty through accumulated credit - no case has been made out to show that the credit taken was wrong; that debiting the cenvat account at the time of clearance of goods is anything other than payment of excise duty; that the amount so debited from the cenvat account goes back to the Central Government account and that there is any violation of provisions of 11D (1) since section 11D is not applicable so recovery u/s 11D (1) is not justified

Summary

Issues:

1. Determination of assessable value based on provisional prices and issuance of supplementary invoices.
2. Accumulation of credit balance in the cenvat account due to substantial exports.
3. Interpretation of Section-4 regarding transaction value and excess duty payment.
4. Application of Section 11D for recovery of excess duty paid and interest.
5. Submission of the appellant regarding provisional pricing and encashment of cenvat credit.
6. Reference to circular No. 651/42/2002-CX and relevant case laws.
7. Commissioner's findings on the nature of duty paid and applicability of Section 11D.
8. Dispute on the treatment of duty paid through cenvat credit and its relation to Section 11D.
9. Analysis of Section 11D and clarification issued by the Board.
10. Decision on the appeal and consequential relief granted.

Analysis:

The case involved the appellant, a manufacturer of copper cathodes and rods, who determined the assessable value of finished products based on the average London Metal Exchange (LME) price. The appellant provisionally assessed the value at 95% of the previous month's average LME price and adjusted it later based on the actual monthly average. The Commissioner held that the excess duty paid was not in the nature of duty and must be credited to the Government under Section 11D of the Central Excise Act, 1944. The Commissioner also ordered the recovery of the excess duty paid along with interest.

The appellant argued that the provisional pricing method was industry practice and not done with the intention to encash cenvat credit illegally. They contended that the duty collected from buyers was deposited to the Government, thus no violation of Section 11D occurred. The appellant referred to a circular and case laws to support their arguments.

The Tribunal observed that the appellant's provisional pricing method was legitimate and not done with mala fide intent. The accumulated credit balance was due to substantial exports, and the duty paid through cenvat credit was indeed duty paid on the consignments. The Tribunal disagreed with the Commissioner's view on bifurcating the duty paid through cenvat credit and held that the amount debited from the cenvat account was duty paid and went back to the Central Government.

The Tribunal analyzed Section 11D and the Board's clarification, concluding that no violation occurred, and the appellant's actions were in line with the law. Therefore, the appeal was allowed, and consequential relief was granted to the appellant.