2008 (2) TMI 240 - AT - Central Excise

Demand u/s 11D - revenue plea is that the SS scrap is chargeable to nil duty and the appellant realised the duty from the customers and therefore, Section 11D is applicable - invoice shows that goods (SS scrap) were cleared on payment of 8% of the amount of value - duty is paid on fortnightly/monthly basis and debited the duty from Cenvat account and therefore, Section 11D cannot be attracted revenue plea is rejected demand not sustainable

Summary

Issues:
1. Reversal of amount under Rule 6 of Central Excise Rules, 2002 for using duty-paid inputs in manufacturing exempted goods.
2. Recovery of amount collected from customers as Central Excise duty under Section 11D of Central Excise Act, 1944.
3. Applicability of Section 11D in case of duty paid on exempted goods.

Analysis:
1. The appellants were involved in manufacturing dutiable final products and exempted goods, availing Cenvat credit on inputs. A show cause notice was issued for reversal of amount under Rule 6 of Central Excise Rules, 2002 due to using duty-paid inputs in manufacturing exempted goods. The Adjudicating Authority confirmed the demand and imposed a penalty. The Commissioner (Appeals) set aside the recovery under Rule 6(3) but upheld the demand under Section 11D of Central Excise Act, 1944, reducing the penalty.

2. The appellants argued that they paid duty on a regular basis and debited it from the Cenvat account, citing a Tribunal decision to support their stance. The Department contended that since the exempted goods were charged nil duty, Section 11D applied as duty was collected from customers. They also argued that Section 11D payments should be made through PLA, not Cenvat account.

3. The Tribunal analyzed the facts and previous decisions, noting that the appellants cleared the exempted goods by paying duty and debiting it from the Cenvat account. Referring to the precedent set by the case of Inductotherm (India) Pvt. Ltd., the Tribunal concluded that Section 11D could only be invoked if excess duty was collected and not deposited, which was not the case here. As the duty was paid and accounted for, the Tribunal set aside the recovery under Section 11D and the penalty, allowing the appeal.

Conclusion:
The Tribunal ruled in favor of the appellants, setting aside the recovery under Section 11D of the Central Excise Act, 1944, and the imposed penalty. The decision was based on the appellants' regular duty payments and proper accounting, aligning with the precedent established in the Inductotherm (India) Pvt. Ltd. case.