2024 (7) TMI 61 - AT - Central Excise

Recovery of amount representing as duty of excise from the buyer or not - applicability of Section 11D of the Central Excise Act - SCN issued after five years from the date of the clearance of the cylinders - Time Limitation. HELD THAT - Section 11D is not applicable in the present case as no amount representing as duty of excise has been recovered from the buyer. Further, it is found that on the invoices issued after 24.01.2004 after date of availing of area based exemption, the appellant has subsequently mentioned on the invoices Exemption Notification No. 50/03-CE dated 10.06.2003 and against the column of B.E.D @ 16% the word exempted specifically mentioned which clearly shows no amount has been charged from the customers representing as duty of excise. This issue has been considered by the Division Bench of this Tribunal in the case of PITAMBAR COATED PAPER LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I 2002 (8) TMI 686 - CEGAT, NEW DELHI where it was held that ' there is not an iota of evidence on record that in the instant case, the appellants had Collected the amount from the buyers as representing excise duty. As observed above, in their invoices against column BED, they had put a X which indicated that they had not accepted any amount representing as excise duty from the buyers. Whenever, they had collected earlier to the availment of the exemption from payment of duty under the notification in question, they had separately shown the rate of duty recovered from the buyers of the goods, against the column BED. This fact is quite evident, as discussed above, from the copies of the invoices placed on the record by the appellants. Therefore, the provisions of Section 11D of the Act could not be Invoked against the appellants.' Time Limitation - HELD THAT - It is found that no statutory period is prescribed for recovery in Section 11D but Punjab and Haryana High Court in the case of CCE, Chandigarh Vs. Hari Concost Pvt. Ltd 2009 (4) TMI 170 - PUNJAB AND HARYANA HIGH COURT after relying upon the judgment of the Hon ble Apex Court in the case of CCE Vs. Bharat Sanchar Nigam Ltd. 2017 (11) TMI 348 - CESTAT KOLKATA reasonable period for effecting the recovery but in the present case the recovery is sought to be affected after the expiry of more than five years. The impugned order is not sustainable in law and therefore set aside - appeal allowed.

Summary

Issues:
1. Interpretation of Section 11D - Recovery of excise duty from customers.
2. Applicability of Section 11D to goods exempt from duty.
3. Bar of limitation for recovery under Central Excise Act.

Analysis:

Issue 1: Interpretation of Section 11D - Recovery of excise duty from customers
The case involved a dispute regarding the recovery of excise duty from customers by the appellant. The department alleged that the appellant collected amounts representing excise duty from customers even after availing exemption under Notification No.50/03-CE. The appellant argued that no amount representing duty was charged from customers, as invoices clearly mentioned the exemption and no duty was shown against the column of "B.E.D @ 16%." The Tribunal, after considering the submissions and precedents, found that Section 11D was not applicable as no duty amount was recovered from buyers. The Tribunal cited the Pitambar Coated Paper Ltd. case to support its decision, emphasizing the need for evidence of duty collection from buyers for invoking Section 11D.

Issue 2: Applicability of Section 11D to goods exempt from duty
The appellant contended that Section 11D did not cover goods wholly exempt or chargeable to Nil rate of duty before 2008. They relied on the Everest Industries Ltd. case to support this argument. The Tribunal agreed with the appellant, stating that Section 11D did not apply to goods fully exempt from duty. The Tribunal highlighted that the appellant did not collect any amount representing excise duty and, therefore, the demand was not sustainable under Section 11D.

Issue 3: Bar of limitation for recovery under Central Excise Act
The appellant also argued that the recovery proceedings were time-barred as the show cause notice was issued after more than five years from the relevant period. The appellant relied on the decisions of CCE Vs. Hari Concast Pvt. Ltd. and CCE Vs. Bharat Sanchar Nigam Ltd. to support their contention. The Tribunal agreed that the recovery sought after more than five years was beyond a reasonable period. The Tribunal held that the impugned order was not sustainable in law and set it aside, allowing the appeal of the appellant with consequential relief, if any, as per law.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that no duty amount was collected from customers, Section 11D did not apply to fully exempt goods, and the recovery proceedings were time-barred. The impugned order was set aside, and the appeal of the appellant was allowed.