2018 (6) TMI 475 - AT - Central Excise

Recovery u/s 11D of CEA - Concessional rate of duty - N/N. 1/93 dated 28.2.1993 and N/N. 16/97 dated 1.4.1997 - The case of the department is that during the course of exemption, the price charged to the customer is inclusive of excise duty, therefore, excise duty is recoverable u/s 11D of the CEA 1944 - Held that - The facts is not in the dispute that during the exemption limit, the same price was charged towards the sale of the goods, but during the exemption limit, the appellant have not shown the excise duty either in the excise invoice or in the commercial invoice to show that the appellant have collected the amount in the name of excise duty during the exemption limit, whatsoever the price was charged, therefore, the price for sale of the goods and no element of excise duty was involved. From the plain reading of Section 11D, it can be seen that when any person who has collected any amount from the buyer of any goods in any manner is representing duty of excise, shall forthwith would pay amount so collected to the credit of the Central Government - in the present case, no amount was collected representing duty of excise during the exemption limit - the demand was raised without any basis u/s 11D, hence is not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Applicability of excise duty during exemption limit
- Interpretation of Section 11D of the Central Excise Act, 1944
- Allegations of suppression of facts and imposition of penalty

Analysis:

Applicability of excise duty during exemption limit:
The case involved the appellant, engaged in the manufacture of rubber solution, availing concessional duty rates under specific notifications. The dispute arose regarding the collection of excise duty during the exemption limit period. The department contended that the price charged during the exemption period included excise duty, making it recoverable under Section 11D of the Central Excise Act, 1944. However, the appellant argued that no excise duty was collected from customers during the exemption limit, and the price remained the same before and after crossing the exemption threshold. The Tribunal observed that the appellant did not show excise duty separately in invoices during the exemption period, indicating that no amount was collected as excise duty. Therefore, the demand made by the department during the exemption limit was deemed baseless.

Interpretation of Section 11D of the Central Excise Act, 1944:
The Tribunal analyzed Section 11D, which mandates the deposit of excise duty collected from buyers with the Central Government. It noted that the section requires the collection of any amount representing excise duty from buyers for it to be payable to the government. In this case, since no amount was explicitly collected as excise duty during the exemption period, the demand under Section 11D was found to lack a legal basis. The Tribunal emphasized that the mere similarity in prices before and after the exemption limit does not automatically imply the collection of excise duty during the exemption period.

Allegations of suppression of facts and imposition of penalty:
The appellant argued against the imposition of penalties, citing no suppression of facts on their part. They relied on previous judgments to support their case. The Tribunal concurred, stating that since no excise duty amount was collected during the exemption period, there was no basis for invoking Section 11D. Consequently, the impugned order was set aside, and the appeal was allowed with appropriate relief as per the law.

In conclusion, the judgment clarified the requirements for invoking Section 11D of the Central Excise Act, emphasizing the necessity of explicitly collecting excise duty amounts from buyers. It highlighted the importance of factual evidence in determining the applicability of excise duty and reiterated that assumptions alone cannot justify demands under the said provision.