2016 (7) TMI 1144 - AT - Central Excise

Duty liability - whether the respondent is liable to pay duty under section 11 D being a dealer and not being a manufacturer of the goods? - Held that - The said issue came up before the Hon ble Apex Court in their own case reported (2011 (9) TMI 434 - SUPREME COURT OF INDIA ) wherein held that the respondent is a dealer and duty is payable by the manufacturer of the goods. In that circumstance, the duty is not payable by the respondents. In that circumstance, no demand is sustainable against the respondent under section 11 D of Central Excise Rules, 1944. We also find from the records, no excess duty has been recovered by the respondents. Therefore, we do not find any infirmity in the impugned order and the same is upheld. The appeals filed by the Revenue are dismissed.

Summary

Issues involved: Interpretation of liability to pay duty under section 11 D of Central Excise Act, 1944 for a dealer who purchased goods after a rate of duty was enhanced.

Analysis:

The judgment by the Appellate Tribunal CESTAT CHANDIGARH involved a case where the respondent, a dealer, purchased goods from parent companies or independent parties after a rate of duty was increased as per the Finance Act, 1999. The revenue alleged that the respondent recovered higher excise duty from buyers due to the enhanced rate and initiated proceedings under section 11 D of the Central Excise Act, 1944. The demand of duty was confirmed, but on appeal before the Commissioner, the demand under section 11D was set aside, leading to the revenue appealing before the Tribunal.

Upon hearing both parties and considering the submissions, the Tribunal found a crucial issue to be whether the respondent, as a dealer and not a manufacturer, is liable to pay duty under section 11 D. The Tribunal referred to a previous judgment by the Hon’ble Apex Court in a similar case where it was held that duty is payable by the manufacturer, not the dealer. Since no excess duty was recovered by the respondent, the Tribunal upheld the decision of the Commissioner and dismissed the appeals filed by the Revenue. The Tribunal concluded that no demand is sustainable against the respondent under section 11 D of the Central Excise Rules, 1944, and found no infirmity in the impugned order.

In summary, the judgment clarifies the liability of a dealer to pay duty under section 11 D of the Central Excise Act, 1944, in cases where the rate of duty has been enhanced. It emphasizes that duty is payable by the manufacturer of the goods, not the dealer, and that no demand is sustainable against the dealer if no excess duty has been recovered. The decision provides clarity on the interpretation of the law in such scenarios and sets a precedent based on previous rulings by higher courts.