2018 (7) TMI 415 - AT - Central Excise

Concessional rate of duty - free sale sugar / normal sale sugar - benefit of incentive scheme - recovery u/s 11D of Central Excise Act - Held that - From the report, it is brought out that the appellants have not collected any amount representing excise duty, other than the excise duty which they have already paid to the Government. The demand has been raised alleging that the appellants have collected the amount representing excise duty - When the appellants have not collected any amount representing excise duty, the demand invoking Section 11D cannot sustain. The Tribunal in the case of Shakthi Sugars Ltd. as well as Kisan Sahkari Chini Mills Ltd. 2011 (5) TMI 430 - CESTAT, NEW DELHI has held that the amount collected as incentive cannot be recovered u/s 11D of Central Excise Act. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the incentive collected by the appellants under the scheme of 1987 constitutes excise duty?
2. Whether the demand raised under Section 11D of the Central Excise Act for the amount collected by the appellants is valid?

Analysis:
1. The appellants, sugar manufacturers, benefited from an incentive scheme in 1987 allowing them to retain the difference between levy sugar and normal sale sugar prices. The Central Government prescribed concessional rates for excise duty on free sale sugar and levy sugar. The dispute arose when Section 11D was introduced, and the excise department sought to recover the incentive collected, alleging it as excise duty. The original authority confirmed a demand of &8377; 1,49,99,292/-, leading to the appeal. The appellant argued that the incentive was not excise duty, as it was used for loan repayment and clearly shown separately in documents.

2. The appellant contended that the incentive collected was not excise duty but a separate amount added to the cost of sugar. The Tribunal directed the appellant to provide documents for examination, which revealed that the incentive was collected separately until a certain date, after which it was included in the cost of sugar. The Tribunal noted that no amount representing excise duty was collected beyond what was paid to the government. Relying on precedents, the Tribunal held that the demand under Section 11D was not sustainable as no excise duty amount was collected. The appeal was allowed, setting aside the impugned order.

In conclusion, the Tribunal ruled in favor of the appellants, determining that the incentive collected under the 1987 scheme did not constitute excise duty. The demand raised under Section 11D was deemed invalid as no amount representing excise duty was collected beyond what was paid to the government. The decision provided consequential reliefs to the appellants, and the appeal was allowed.