2024 (5) TMI 125 - AT - Central Excise

Short payment of Central Excise Duty - mis-declaration of value of the goods cleared to BSE - clearance of some used capital goods on commercial invoices without paying the central excise duty - confirmation of demand on the wrong presumption that central excise duty is to be levied on the amounts received - HELD THAT - The constitutional mandate of the Union to levy excise duty and also the charging section under the Central Excise Act clearly provide for levy of excise duty only on goods manufactured or produced in India. The measure of tax could be based on the quantity or value and in most cases, it is based on the value. Duties of excise become payable on removal of goods (Rule 2 of the Central Excise Rules, 2002) and have to be paid by the sixth day of the following month (Rule 8). This payment is not contingent on the receipts for the goods removed and sold. The amounts may be paid in that month, in advance or much later. Regardless of when the payment is received or not received, duty becomes payable on removal and has to be paid by the sixth day of the following month - Form 26AS is system generated by the Income tax portal as a compilation of all the amounts paid by various persons and the TDS deducted from the assessee during the financial year. There is no contrary overriding provision in the Central Excise Act. Therefore, section 102 of the Evidence Act applies and in case of Show Cause Notices issued under Central Excise Act, the burden of proof lies on the Revenue because if no evidence is provided by either side, the SCN fails. Therefore, it was not for the appellant to reconcile the documents and produce evidence but it was for the Revenue to establish that some excise duty escaped assessment and has to be paid. This demand of central excise duty on the capital goods sold by the appellant (which were not manufactured by it at all) is beyond the scope of the charging section 3 of the Central Excise Act and also beyond the legislative powers of the Union as per entry 83 of List 1 of the Seventh Schedule of the Constitution - the SCN, the OIO and the impugned order were issued under the incorrect understanding of law that central excise duty could be levied on payments received (whether or not they were related to the excisable goods manufactured or produced and sold) and on goods sold through commercial invoices (even if they were not manufactured or produced). The impugned order, therefore, cannot be sustained and needs to be set aside - Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the levy of Central Excise duty on goods cleared, misdeclaration of value, demand of duty on used capital goods, and imposition of penalty under section 11AC.

Levy of Central Excise duty on goods cleared:
The appellant, a manufacturer of printed material, entered into a contract with the Board of Secondary Education of Madhya Pradesh to supply answer sheets. The department alleged misdeclaration of value based on Form 26AS, demanding additional duty. However, the Tribunal clarified that duty is payable on removal of goods, not contingent on receipts, and cannot be demanded on amounts received unrelated to excisable goods.

Misdeclaration of value:
The department alleged that the appellant had misdeclared the value of goods cleared, leading to a demand for differential duty. The Tribunal emphasized that duty is to be levied only on excisable goods manufactured or produced, not on amounts received, and rejected the demand based on incorrect understanding of the law.

Demand of duty on used capital goods:
The department issued a Show Cause Notice demanding duty on used capital goods sold by the appellant. The Tribunal noted that excise duty cannot be charged unless goods are manufactured or produced by the appellant, and the demand on capital goods sold, which were not manufactured by the appellant, was beyond the scope of the law.

Imposition of penalty under section 11AC:
The department proposed to impose an equal amount as penalty under section 11AC. However, the Tribunal set aside the impugned order, stating that the demand and penalty cannot be sustained as they were based on an incorrect understanding of the law regarding the levy of Central Excise duty.

Conclusion:
The Tribunal allowed the appeal, set aside the impugned order, and provided consequential relief to the appellant, emphasizing that duty is chargeable only on excisable goods manufactured or produced in India, not on amounts received or on goods sold through commercial invoices that were not manufactured or produced by the appellant.