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2016 (5) TMI 896 - AT - Central ExciseWhether amounts paid under Rule 6(3)(b) of the CENVAT Credit Rules, 2004 can be demanded under Section 11D of the Central Excise Act, 1944 when such amounts paid by the appellant are reimbursed by the Indian Railways Board - Held that - in view of the decision of Larger Bench in the case of Unison Metals Ltd. Vs. CCE, Ahmedabad -I 2006 (10) TMI 171 - CESTAT, NEW DELHI which was accepted by the Department as per CBEC Circular No. 870/8/2008-CX dated 16/05/2008, under Section 11D of the Central Excise Act, 1944 with respect to amounts reimbursed to the appellant, equivalent to the payments made under Rule 6 (3) (b) of the CENVAT Credit Rules, is not justified. - Decided in favour of appellant
Issues involved:
Whether amounts paid under Rule 6 (3) (b) of the CENVAT Credit Rules can be demanded under Section 11D of the Central Excise Act when reimbursed by the Indian Railways Board. Detailed Analysis: Issue 1: Demand under Section 11D The appeal was filed against an order confirming a demand of Central Excise Duty and Education cess. The appellant argued that the amounts paid under Rule 6 (3) (b) were reimbursed by the Railways, and thus, the demand under Section 11D was not justified. The appellant manufactured railway wagons and parts exempted from duty under specific notifications. The appellant's sister unit manufactured couplers and bogies, and the appellant paid amounts under Rule 6 (3) (b) of the CENVAT Credit Rules, which were reimbursed by the Railways. The appellant cited a communication from the Director, Railway Stores, stating the reimbursement rates for different units. The appellant relied on a previous case and a Larger Bench decision to support their argument that such payments could not be demanded under Section 11D. Issue 2: Legal Precedents The appellant's Senior Advocate referenced a Larger Bench decision in the case of Unison Metals Ltd. vs. CCE, Ahmedabad-I, to argue that amounts paid under Rule 57CC of the Central Excise Rules could not be recovered under Section 11D. The Advocate highlighted the similarity between Rule 57CC and Rule 6 (3) (b) of the CENVAT Credit Rules. Additionally, a CBEC Circular was mentioned to show that the Department had accepted the decision in the Unison Metals case. Issue 3: Department's Stand The Revenue, represented by the Superintendent, reiterated the Adjudicating authority's stand and mentioned that the Circular supporting the appellant's argument was not available during the original order. However, the Tribunal noted that the Circular dated 16/5/2008 had been accepted by the Department, indicating a shift in their position. Judgment After considering the arguments and case records, the Tribunal referred to the Larger Bench decision in the Unison Metals case, which held that when amounts paid are recovered from buyers and deposited with the revenue, Section 11D does not apply. The Tribunal emphasized that the scheme of excise duty payment involves manufacturers recouping the tax already paid upon selling goods, not collecting tax separately from buyers. As the amounts paid were already reimbursed to the revenue, Section 11D did not apply. The Tribunal concluded that the demand under Section 11D for amounts reimbursed to the appellant was not justified, and thus, allowed the appeal. The decision was in line with the settled proposition of law and the Department's acceptance of the Larger Bench decision. Conclusion The Tribunal ruled in favor of the appellant, highlighting that the reimbursement of amounts paid under Rule 6 (3) (b) of the CENVAT Credit Rules, when already deposited with the revenue, did not warrant a demand under Section 11D. The judgment aligned with established legal principles and the Department's acknowledgment of the relevant legal precedents.
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