2024 (11) TMI 548 - AT - Central Excise

Reversal/recovery of CENVAT Credit - clearance of input as such in terms of Rule 3 (5) of Cenvat Credit Rules, 2004 - Section 11D of Central Excise Act, 1944 - HELD THAT - The appellant have paid the excise duty on the removal of input as such on the transaction value, the said excise duty was found to be in excess to the actual Cenvat Credit involved in such removal of input as such. From the plain reading of the section 11D, it is clear that if an assessee collects an amount in the name of excise duty and retained the same with him. The same needs to be credited into the Central Government. In the present case, there is no dispute that even though, the appellant have charged excise duty over and above the Cenvat Credit involved in inputs removed as such but the total amount collected from the customer has been paid by debiting the Cenvat account. Therefore, once any amount collected in the name of excise duty and paid to the government, the same cannot be demanded twice as provided under Section 11D of the Central Excise Act. This issue has been considered in the case of Shivam Metals 2008 (8) TMI 654 - CESTAT, NEW DELHI wherein, this Tribunal has held that ' In the present case, the Appellant paid duty on the exempted goods and collected the amount from their customers as evident from the invoice. It is noted that the Appellant had not retained any amount and paid to the Government and, therefore, Section 11D of the Act cannot be invoked. So, the impugned order is not sustainable, and it is set aside.' From the above judgment, it is settled that any amount collected but paid to the Central Government, the demand of such amount cannot be raised invoking Section 11D of the Central Excise Act, 1944. Following the above judgment and the discussion made, it is opined that the demand under Section 11D in the present case is not sustainable. The impugned orders are set aside - The appeals are allowed.

Summary

Issues:
- Interpretation of Rule 3(5) of the Cenvat Credit Rules, 2004 regarding payment of excise duty on inputs
- Applicability of Section 11D of the Central Excise Act, 1944 on the recovery of excess amount collected on inputs
- Analysis of relevant case laws in determining the liability of the appellant

Detailed Analysis:
1. The case involved the appellant engaged in manufacturing CNC turning centra, vertical machining centre, and other machines under Chapter 84 of the Central Excise Tariff Act, 1985. The dispute arose from the appellant availing Cenvat Credit on inputs and clearing certain inputs as such on payment of excise duty. The department contended that the appellant must pay an amount equal to the Cenvat credit availed on such inputs under Rule 3(5) of the Cenvat Credit Rules, 2004. The demand for the differential amount was confirmed under Section 11D of the Central Excise Act, 1944, which was upheld by the Ld. Commissioner (Appeals), leading to the appeals before the Tribunal.

2. The appellant argued that although they had paid an excess amount on the inputs compared to the actual Cenvat Credit, the excess amount collected was paid by debiting the Cenvat account. The appellant relied on various judgments, including Shivam Metals v. CCE, Jaipur and Thermax Ltd. v. Union of India, to support their position that recovery under Section 11D was not applicable in such cases.

3. On the other hand, the revenue contended that as per Rule 3(5), the appellant was required to pay only the amount equal to the Cenvat Credit availed on the inputs removed as such, making the excess amount collected by the appellant recoverable under Section 11D of the Central Excise Act, 1944.

4. The Tribunal analyzed the provisions of Section 11D, which require any amount collected in excess of the duty assessed to be paid to the Central Government. The Tribunal referred to the case of Shivam Metals and the Circular dated 7th August, 2002, which clarified that if the duty collected had been deposited with the Government, Section 11D would not apply. Relying on the judgments and circular, the Tribunal held that the demand under Section 11D was not sustainable in the present case, as the appellant had paid the collected amount to the Central Government.

5. Consequently, the Tribunal set aside the impugned orders, allowing the appeals in favor of the appellant based on the settled legal principles established in the case laws and circular discussed, thereby concluding that the demand under Section 11D was not applicable in the given circumstances.