2017 (9) TMI 695 - AT - Central Excise

Exemption under N/N. 6/2002 dated 1.3.2002 - water supply scheme projects - Revenue held a view that wherever there is no treatment plant the whole exemption will not apply - Held that - similar issue decided in the case of Jain Irrigation Systems Ltd Versus Commissioner of Central Excise & Customs-Nashik 2017 (3) TMI 990 - CESTAT MUMBAI , where it was held that where certificates are the qualification for exemption, it is not open to the central excise authority to overrule that certification - denial of exemption untenable. Demand u/s 11D - Held that - there is no evidence that the sales document namely invoices etc. indicated any excise duty separately so that the buyer has paid any money representing excise duty to the appellant. In the absence of such situation, the provisions of Section 11D cannot be attracted and the impugned order is without merit. Penalty - Held that - Since the main appeal is allowed, there is no question of penalty on other appellants. Appeal allowed - decided in favor of appellant.

Summary

Issues:

1. Exemption under Notification No.6/2002 for PSC pipes manufactured by the appellants.
2. Recovery of excise duty amount collected by the appellants under Section 11D of the Central Excise Act, 1944.

Exemption under Notification No.6/2002:

The appellants, engaged in manufacturing PSC pipes, claimed exemption under Notification No.6/2002 for clear water supply scheme projects. The Revenue contended that the exemption was not applicable and initiated proceedings to recover duty. The appellants argued that the District Collectors' certificates endorsed the pipes' intended use for exempted projects, thus the exemption should apply. The Tribunal noted that certificates by competent authorities should be accepted unless repudiated. Citing previous decisions, including P&C Constructions P. Ltd. and others, the Tribunal found the denial of exemption untenable. The appellants' counsel also argued that the definition of a treatment plant should not be strictly interpreted, as even a simple process at the water source could make water fit for consumption.

Recovery of excise duty under Section 11D:

Regarding the demand under Section 11D, the Revenue claimed that the appellants collected amounts representing excise duty and should have paid it to the Government. The appellants contended that their contracts included excise duty in the overall consideration, but their invoices did not separately mention excise duty. They argued that Section 11D applies only when excise duty amounts are collected, supported by case laws. The Tribunal emphasized that to invoke Section 11D, clear evidence of collecting amounts representing excise duty is necessary. Ledger entries alone were insufficient to establish such collection. Referring to previous decisions like Poddar Industrial Corporation and others, the Tribunal held that demands under Section 11D cannot be raised if contracts show inclusive excise duty without separate indication on sales documents. As the invoices did not specify excise duty separately, the Tribunal found the Revenue's claim baseless.

Penalties on Individuals:

Three additional appeals addressed penalties on individuals, which were dismissed as the main appeal was allowed. The Tribunal set aside the impugned order, allowing the appeals with any consequential relief.

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