2018 (6) TMI 234 - AT - Central Excise

Demand u/s 11D towards recovery of reversal of cenvat credit from the buyers as Duty - Revenue is of the view that, as the appellant has recovered 8% of the value of exempted goods as duty from the buyers therefore, they are required to pay the said amount in terms of Section 11D of the CEA 1944 - Held that - A similar issue has come up before the Larger Bench of this Tribunal in the case of Unison Metals Limited vs. CCE, Ahmedabad 2006 (10) TMI 171 - CESTAT, NEW DELHI , where it was held that (irrespective of whether the 8% payments were duty or not) since the 8% amount remain already paid to the revenue, and no amount is retained by the assessee, Section 11D has no application. As the amount collected from the buyers has already stand paid by the appellants, the provisions of Section 11D of the Act are not applicable to the facts of this case - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand confirmed for recovery of 8% value of exempted goods as duty from buyers.

Analysis:
The appellant appealed against an order confirming a demand for recovering 8% value of exempted goods as duty from buyers. The appellant cleared various dutiable and exempted paper and paper film during May 2000 to 2001. They reversed 8% of the value of exempted goods in the Cenvat credit account and charged it as duty from buyers. The Revenue contended that since the appellant recovered 8% as duty from buyers, they must pay this amount under Section 11D of the Central Excise Act, 1944. A show cause notice was issued, adjudicated, and demand confirmed. The appellant challenged this order.

The Tribunal referred to a similar issue in the case of Unison Metals Limited vs. CCE, Ahmedabad, where it was established that if amounts collected from buyers are not retained by the assessee, the obligation under Section 11D does not apply. This aligns with the Supreme Court's judgment in Mafatlal Industries, emphasizing that double taxation is not intended under Section 11D. The Tribunal highlighted that the scheme of excise duty payment involves manufacturers recovering already paid duty upon selling goods, not collecting tax first and then remitting it to the government. Therefore, if the 8% amount was already paid to the revenue, and not retained by the assessee, Section 11D does not apply.

A Circular issued by CBEC further clarified that as long as the 8% or 10% amount is paid to the Government as per the rules, Section 11D does not apply even if recovered from buyers. The Circular specified that CENVAT credit cannot be taken for this amount by buyers. As it was established that the amount collected from buyers had already been paid by the appellants, Section 11D was deemed inapplicable. Consequently, the impugned order was set aside, and the appeal allowed with consequential relief.