2003 (4) TMI 213 - AT - Central Excise

Summary

Issues:
1. Interpretation of Section 11D of the Central Excise Act in the context of payment of duty on exempted goods.
2. Application of Rule 57CC in cases where manufacturers produce both dutiable and exempted final products.

Analysis:

1. Interpretation of Section 11D:
The issue revolves around the retrospective amendment of Section 11D by the Finance Act, 2000, making it applicable only to persons liable to pay duty under the Central Excise Act. The Tribunal analyzed whether the appellants, engaged in manufacturing exempted goods, are required to pay excise duty under Section 11D. The Tribunal emphasized that Section 11D applies to persons liable to pay duty and the amount collected must exceed the duty assessed. Despite the appellants collecting 8% from buyers, the Tribunal concluded that since the goods were exempted, no duty was paid on them, and the collected amount represented excise duty, falling under Section 11D.

2. Application of Rule 57CC:
The Tribunal delved into the application of Rule 57CC concerning manufacturers producing both dutiable and exempted final products without maintaining separate accounts. The rule mandates payment of 8% on exempted final goods to neutralize input duty credit. The Tribunal observed that the appellants, unable to segregate accounts, paid 8% to offset the credit availed on inputs for exempted goods. By analyzing the interplay between Rule 57CC and Section 11D, the Tribunal held that the appellants, liable to pay duty on dutiable goods, fell under the purview of "every person" in Section 11D, necessitating the payment of 8% collected from buyers to the Government.

In conclusion, the Tribunal dismissed the appeal while setting aside the imposed penalty, emphasizing the applicability of Section 11D to manufacturers of exempted goods collecting amounts representing excise duty. The judgment provides a detailed interpretation of legal provisions and their practical implications in cases involving the manufacture of both dutiable and exempted final products.