2004 (7) TMI 255 - AT - Central Excise

Summary

Issues:
- Interpretation of deemed credit facilities under specific notifications
- Determination of whether duty incidence has been passed on to consumers
- Application of Section 12B regarding passing on the duty incidence to buyers

Interpretation of Deemed Credit Facilities:
The case involved a dispute regarding the availing of deemed credit facilities under specific notifications by the assessee. The assessees had initially availed a deemed credit rate of 45% under Notification No. 7/2001 but failed to adopt the enhanced rate of 50% under Notification No. 28/2001 due to delayed knowledge. The assessees were job workers collecting charges inclusive of all taxes, including excise duty. The duty liability was set off against the total duty at the time of clearance, with the remaining balance paid in PLA. The Commissioner noted that the duty incidence was not passed on to buyers, as the job charges did not reflect duty payment particulars, and the duty impact was absorbed as part of overhead expenses.

Duty Incidence and Passing on to Consumers:
The Revenue contended that the duty incidence should be deemed to have been passed on to buyers as per Section 12B unless proven otherwise. They argued that the excise duty was part of the job charges and could have been naturally recovered from customers. However, the Commissioner found that the assessees had not charged the higher duty element from the buyer, absorbing the excise duty in their overhead expenses. Citing a precedent where a similar situation was considered, the Tribunal upheld the Commissioner's findings that the duty incidence had not been passed on to consumers.

Application of Section 12B:
After hearing both sides and examining the records, the Tribunal concurred with the Commissioner's decision based on the agreement between the assessees and the buyer, where the duty rate was fixed at a specific amount. Referring to a previous judgment, the Tribunal found no merit in the Revenue's appeal, as it was established that the duty incidence had not been passed on to the buyers. Consequently, the appeal was rejected based on the findings supported by legal precedents and the specific circumstances of the case.