2023 (10) TMI 727 - AT - Central Excise

Realization of 8%/10% amounts to receipt of Excise Duty - Requirement to remit the same to the Department - clearance of both dutiable and exempted goods from their factory premises - non-maintenance of separate records for inputs - HELD THAT - The issue is no more res integra. The Larger Bench of the Tribunal in the case of UNISON METALS LTD. VERSUS COMMISSIONER OF C. EX., AHMEDABAD-I 2006 (10) TMI 171 - CESTAT, NEW DELHI has held The scheme of the law is that manufacturers shall not collect amounts falsely representing them as central excise duty and retain them, thus, unjustly, benefiting themselves. In the present cases, (irrespective of whether the 8% payments were duty or not) since the 8% amount remain already paid to the revenue, and no amount is retained by the assessee, Section 11D has no application. After the Larger Bench s decision, the Board has issued Circular No.870/8/2008-CX dated 16.05.2008, wherein it has been clarified that the CENVAT credit of the said amount of 8% or 10% cannot be taken by the buyer since such payment is not a payment of duty in terms of rule 3(1) of the CENVAT Credit Rules, 2004. Therefore, the said 10% amount should be shown in the invoice as 10% amount paid under Rule 6 of the CENVAT Credit Rules, 2004 . The impugned order is set aside - appeal allowed.

Summary

Issues involved:
The issue involves the realization of 8%/10% from customers by the appellant, which the Department claimed as Excise Duty requiring remittance.

Summary:

Issue 1: Realization of 8%/10% from customers and its treatment as Excise Duty

The appellant cleared both dutiable and exempted goods without maintaining separate accounts for inputs, availing Cenvat credit on all inputs. For exempted goods, they paid 8%/10% as per Rule 6(3)(b) of the Cenvat Credit Rules, 2004, later realizing this amount from customers through Debit Notes. The Department contended that such realization amounts to Excise Duty receipt. The Tribunal examined past decisions and Circular No.870/8/2008-CX, which clarified that once 8%/10% is paid to the Government, it need not be paid again, even if recovered from customers. The Tribunal cited the case of Unison Metals Ltd. where it was held that since the 8% amount was already paid to the revenue, Section 11D did not apply. Consequently, the Tribunal allowed the appeal, setting aside the demands and providing consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, highlighting the legal position that the 8%/10% realized from customers need not be remitted to the Department if already paid to the Government, as clarified by Circular No.870/8/2008-CX.