2019 (3) TMI 303 - HC - Central Excise

Process amounting to manufacture or not - applicability of Section 11D of the Central Excise Act, 1944 read with Rule 4 of the Central Excise Rules, 2002 - the CESTAT has proceeded on the basis that the assessee in the present case had not collected any duty over and above the duty liable to be paid - Held that - The CESTAT has failed to even advert to, much less consider the statement of Shri Subbaraj as reflected in the order in original dated 31st August, 2007. In para 5.1.1., it is recorded that Shri Subbaraj, the representative of the assessee, on being asked stated that the assessee had recovered the Central Excise duty from their customers on the additional quantity generated because of blending of ethanol which was sold by the assessee at the same rates as that of the motor spirit ( MS). It is further recorded that Shri Subbaraj stated that since there was no advise from the head office, the central excise duty so collected from their customers was not paid to the credit of the Central Government. No doubt, as contended by Mr. Srivastava, Shri Subbaraj's statement has to be read in its entirety including the portions reflected in paras 5.1.2., 5.1.3., 5.1.4 as well as other material on record - In the present case, all that is observed is that there is no consideration of whatsoever of the statement made by Shri Subbaraj whether in isolation or in the entirety. Non consideration of relevant material on record is a ground for interference. This is not a case of re-appreciation or revaluation of material on record but this is a case where the material which both the parties regard as material, has not been adverted to, much less considered by the CESTAT. From the impugned order, it is apparent that there is no consideration of even the assessee's contention that the assessee was not at all liable for payment of any excise duty since the assessee is not at all involved in any manufacturing. Mr. Srivastava is right that the other evidence adduced even by the assessee is not considered in the impugned order. Since several aspects have also not been considered by the CESTAT or in any case the impugned order does not reflect that such aspects have been considered, thus matter requires reconsideration. Appeal is allowed by way of remand.

Summary

Issues:
1. Interpretation of Section 11D of the Central Excise Act, 1944.
2. Application of Section 11D in a case involving the collection of excess excise duty.
3. Consideration of evidence and statements by the CESTAT in determining liability for excise duty.

Issue 1 - Interpretation of Section 11D:
The High Court considered the interpretation of Section 11D of the Central Excise Act, 1944 in the context of a case where the appellant had collected an amount in excess of the duty assessed from buyers but failed to deposit it with the Central Government. The appellant argued that the statement of their representative, admitting to the collection of excess duty, was ignored by the CESTAT. The court noted that Section 11D commences with a non obstante clause, emphasizing the mandatory nature of the provision.

Issue 2 - Application of Section 11D in Excess Duty Collection:
The court analyzed whether the CESTAT was correct in holding that Section 11D was not applicable in the case, despite evidence showing the collection of excess excise duty by the appellant. The appellant contended that they had not deposited the collected duty due to lack of advice from the head office. On the other hand, the respondent argued that the appellant was not a manufacturer and therefore not liable to pay excise duty. The court emphasized that Section 11D applies to those liable to pay duty under the Act, highlighting the penal nature of the provision.

Issue 3 - Consideration of Evidence by CESTAT:
The court observed that the CESTAT failed to consider the statement made by the appellant's representative regarding the collection of excess duty from customers. The court stressed that the non-consideration of relevant material on record warranted interference. The court found that the CESTAT did not evaluate the evidence comprehensively, leading to the setting aside of the impugned order and remanding the matter for fresh disposal. The court clarified that all contentions of parties were left open for adjudication by the CESTAT in the subsequent proceedings.

In conclusion, the High Court set aside the CESTAT's order and remanded the appeal for fresh disposal, emphasizing the importance of considering all relevant evidence and statements in determining liability for excise duty. The court highlighted the mandatory nature of Section 11D and the need for strict construction of penal provisions in excise law.