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2017 (6) TMI 664 - AT - Central ExciseReversal of CENVAT credit - the appellant used common inputs in the manufacture of both exempted and dutiable final products - According to the Revenue, the appellant collected the said amount as duty of excise from their customers, which is liable to be recovered under Section 11D of the CEA, 1944 - Held that - on an identical issue the Tribunal in the case of M/s. Texmaco Ltd. vs. Commr. Of Central Excise, Kolkata-III 2016 (5) TMI 896 - CESTAT KOLKATA , where it was held that 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 CCR, is not justified - confirmation u/s 11D of the CEA, 1944, with respect to amounts reimbursed to the appellant, equivalent to the payments made under Rule 6(3) (b) of the CCR, is not justified - appeal allowed - decided in favor of appellant.
Issues involved:
- Application of Rule 57AD of the Central Excise Rules, 1944 - Interpretation of Section 11D of the Central Excise Act, 1944 - Reimbursement of amounts paid under Rule 6(3)(b) of the CENVAT Credit Rules, 2004 Analysis: 1. Application of Rule 57AD of the Central Excise Rules, 1944: The appellant used common inputs for both exempted and dutiable final products and debited 8% of the value of exempted goods as required under Rule 57AD. The Revenue contended that this amount collected was excise duty and should be recovered under Section 11D. The Tribunal referred to a previous case where a similar issue was decided in favor of the assessee, emphasizing that the amounts collected from buyers were not retained by the appellant but passed on to the government. This practice was found to be in line with the judgment in Mafatlal Industries case, which clarified the purport of Section 11D and emphasized that the section does not allow for double taxation. The Tribunal concluded that the appellant's actions were in accordance with the law, and the demand under Section 11D was not justified. 2. Interpretation of Section 11D of the Central Excise Act, 1944: The Tribunal's analysis focused on the purpose and scope of Section 11D, highlighting that the provision requires manufacturers to pay duty collected from buyers to the government. In this case, since the 8% amount was already paid to the revenue and not retained by the assessee, Section 11D was deemed inapplicable. The Tribunal stressed that the scheme of excise duty payment involves manufacturers recouping the tax already paid when selling goods, rather than collecting tax first from buyers and then remitting it to the government. The decision was supported by a Larger Bench order and a CBEC Circular, confirming that the appellant's actions were in line with the law. 3. Reimbursement of amounts paid under Rule 6(3)(b) of the CENVAT Credit Rules, 2004: The Tribunal specifically addressed the issue of reimbursement of amounts paid under Rule 6(3)(b) of the CENVAT Credit Rules, 2004. It concluded that the appellant's reimbursement equivalent to the payments made under this rule should not be confirmed under Section 11D. The decision was based on the settled proposition of law and the understanding that since the 8% payments were already paid to the revenue and not retained by the appellant, Section 11D did not apply. Consequently, the impugned orders were set aside, and the appeal was allowed. In summary, the Tribunal's judgment in this case revolved around the correct application of Rule 57AD, the interpretation of Section 11D, and the reimbursement of amounts paid under Rule 6(3)(b). The decision was based on legal principles, previous case law, and the understanding of excise duty payment schemes, ultimately leading to the allowance of the appellant's appeal.
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