2002 (9) TMI 648 - AT - Central Excise

Demand - Higher amount collected from the buyers towards excise duty but not deposited with the Department

Issues Involved:

1. Alleged manipulation of central excise invoices and duty evasion.
2. Confiscation of goods and tempo.
3. Imposition of penalties and interest.
4. Applicability of Section 11A and Section 11D of the Central Excise Act, 1944.

Issue-wise Detailed Analysis:

1. Alleged Manipulation of Central Excise Invoices and Duty Evasion:
The appellants, M/s. Purify Filters, were accused of manipulating central excise invoices by issuing two sets of invoices with different assessable values and duty particulars. The first set (original and duplicate) showed higher assessable values inclusive of full duty rates, while the second set (triplicate and quadruplicate) showed lower assessable values with concessional duty rates. This manipulation led to the collection of Rs. 15,69,203/- as duty from M/s. Escorts Ltd., Faridabad, but only Rs. 10,47,843/- was deposited with the government, resulting in an alleged evasion of Rs. 5,21,360/-. The appellants admitted to this practice in statements recorded by the Central Excise Officers.

2. Confiscation of Goods and Tempo:
The Central Excise Officers seized 3000 pieces of oil filters valued at Rs. 1,50,840/- and a tempo valued at Rs. 2,50,000/- as the goods were unaccounted for in the RG 23A Part II and the duty was not debited in the PLA. The seized goods were provisionally released to the appellants, and the adjudicating authority imposed a redemption fine of Rs. 25,000/- out of a cash security of Rs. 1,00,210/-. The tempo was also ordered to be confiscated, with an option for release on payment of a redemption fine of Rs. 40,000/-.

3. Imposition of Penalties and Interest:
The adjudicating authority confirmed the demand of Rs. 5,21,360/- under Section 11A and imposed an equal amount of penalty under Rule 173Q of the Central Excise Rules, 1944, read with Section 11AC of the Central Excise Act, 1944. Additionally, a penalty of Rs. 1 lakh was imposed on Sh. D.K. Mattoo, partner of M/s. Purify Filters, under Rule 209A. The Commissioner (Appeals) confirmed the duty demand and penalty on the appellants but set aside the confiscation of the tempo and the penalty on Sh. D.K. Mattoo.

4. Applicability of Section 11A and Section 11D of the Central Excise Act, 1944:
The appellants contended that the provisions of Section 11A were not applicable as the case involved the collection of higher amounts representing central excise duty, which falls under Section 11D. The Commissioner (Appeals) mentioned that the duty was confirmed under Section 11A, not Section 11D. The Tribunal referred to the judgment of the Hon'ble Madras High Court in M/s. Eternit Everest Ltd. v. U.O.I., which clarified that Section 11A deals with non-levy, short levy, or erroneous refund of duty, while Section 11D addresses cases where amounts are collected as representing duty but are not actual duty under the Act. The Tribunal concluded that the case should be examined under Section 11D, which was amended with retrospective effect from 12-5-2000 by Section 103 of the Finance Act, 2000.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter to the original authority for de novo consideration under Section 11D. The issues relating to the confiscation of the seized goods and imposition of penalties would remain open and be reconsidered. The appellants were to be given a reasonable opportunity for further written representation and personal hearing. The appeal was disposed of accordingly.

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