2017 (9) TMI 1058 - AT - Central Excise

Valuation - includibility - it appeared to Revenue that the said goods cleared under DGS&D rate contract were inclusive of excise duty and such excise duty was collected by appellant but was not credited to exchequer - Held that - it was held that what is stated in the contract document for supply of the goods indicating that what will be the excise duty is immaterial and whether the provisions of Section 11D are invocable or not is to be examined of the basis of documents which are mentioned in Section 12A of CEA, 1944 - appeal allowed.

Summary

Issues:
- Interpretation of Section 11D of the Central Excise Act, 1944
- Applicability of exemption under Notification No. 49/2003-CE
- Burden of proof regarding collection of excise duty
- Imposition of penalty on the Director of the company

Interpretation of Section 11D:
The case involved a dispute regarding the interpretation of Section 11D of the Central Excise Act, 1944. The appellant argued that since they availed full exemption under Notification No. 49/2003 and the invoices did not indicate collection of excise duty, the provisions of Section 11D were not applicable. They emphasized that the revenue had acknowledged the clearance of goods at nil rate of duty under the said notification. The appellant relied on previous tribunal orders to support their contention that the provisions of Section 11D were not triggered in their case. The tribunal agreed with the appellant's interpretation and held that the impugned Order-in-Original was not sustainable.

Applicability of Exemption under Notification No. 49/2003-CE:
The appellant, engaged in manufacturing paper products, informed the authorities about their intention to avail exemption under Notification No. 49/2003-CE. They started commercial production and cleared goods at nil rate of duty under the notification. The dispute arose when the revenue suspected that excise duty was collected by the appellant under DGS&D rate contracts, despite availing the exemption. The appellant argued that they were eligible for full exemption under the notification, and the invoices clearly indicated this exemption. The tribunal considered this argument in conjunction with the interpretation of Section 11D and concluded in favor of the appellant.

Burden of Proof Regarding Collection of Excise Duty:
The revenue alleged that the appellant collected excise duty under DGS&D rate contracts, which was not credited to the exchequer. The appellant contended that they did not collect any excess amount from the purchasers in the name of excise duty and that the provisions of Section 11D did not apply to them. The tribunal examined the evidence presented, including the invoices indicating nil rate of duty, and sided with the appellant in determining that there was no evidence of excess collection of excise duty.

Imposition of Penalty on the Director of the Company:
In addition to the demand for excise duty, the original authority imposed a penalty on the director of the company. The appellant challenged this penalty before the tribunal. After considering the arguments and the main issue regarding the applicability of Section 11D and the exemption under Notification No. 49/2003, the tribunal set aside the Order-in-Original, ruling in favor of the appellant and allowing both appeals. The tribunal did not find the penalty sustainable in light of the main findings.

In conclusion, the tribunal's judgment in the present case revolved around the interpretation of Section 11D, the applicability of an exemption notification, the burden of proof regarding the collection of excise duty, and the imposition of penalties. The tribunal ultimately sided with the appellant, holding that the Order-in-Original was not sustainable, and providing consequential relief as per the law.