2005 (3) TMI 124 - SC - Central Excise

Deposit of duty in Government s account - Duty collected from customers but not deposited in Revenue s account - Held that - It appears that after this Section was introduced the Appellants have been asked to deposit amounts collected by them from their customers and the adjudication Order to that effect has been upheld by the Tribunal by its order dated 30th March 1998 - incentives granted to the Appellants did not permit them to collect, more than what they had themselves paid, from their customers. If they collected by way of excise, more than what they had paid, then by virtue of Section 11D they were bound to deposit that amount with the Government - Decided against assessee.

Summary

Issues: Interpretation of Section 11D of the Central Excise Act regarding the duty of excise collected from buyers and its deposit with the Central Government; Whether the Appellants were entitled to collect more than what they had paid from their customers; Validity of the Tribunal's order upholding the deposit of amounts collected by the Appellants.

Analysis:
1. Interpretation of Section 11D: The Supreme Court examined the provisions of Section 11D of the Central Excise Act, which mandated that any amount collected from buyers as duty of excise must be promptly paid to the Central Government. The Court highlighted the obligation imposed by this section on individuals collecting excise duty, emphasizing the requirement for immediate payment to the government.

2. Appellants' Collection of Excise Duty: The Court noted that the Appellants, a sugar factory, had received incentives based on a higher percentage of free sale of sugar quota and excise duty concessions. However, it was observed that the Appellants had charged customers the full excise duty amount despite paying only a concessional rate to the government. This discrepancy raised concerns regarding the collection practices of the Appellants.

3. Deposit of Collected Amounts: Following the introduction of Section 11D and subsequent demands made on the Appellants to deposit amounts collected from customers, the Tribunal had upheld the requirement for such deposits. The Court acknowledged the Tribunal's decision to confirm the demand for depositing collected sums during a specific period, indicating that the Appellants were obligated to comply with the provisions of Section 11D.

4. Judgment and Dismissal of Appeal: Ultimately, the Supreme Court concluded that the incentives received by the Appellants did not authorize them to collect more excise duty from customers than what they had paid. Consequently, the Court affirmed the Tribunal's order, stating that the Appellants were bound by Section 11D to deposit any excess amounts collected. The Court found no fault in the Tribunal's decision and dismissed the Civil Appeal, with no order as to costs, thereby upholding the requirement for the Appellants to deposit the surplus excise duty amounts as per the law.