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2006 (10) TMI 171 - AT - Central ExciseCenvat/Modvat - Demand - Taxing statute - Whether the amount of 8% debited from the RG-23A Part II in terms of the provisions of Rule 57CC(1) and collected from the customers is required to be deposited with the Govt. in terms of the provisions of Section 11D of the Central Excise Act - HELD THAT - A reading of Section 11D makes it clear that what is required is that amounts collected as duty should not be retained by the manufacturers and should be deposited with the revenue. The scheme of Central Excise duty payment is that a manufacturer removed goods from the factory of production after payment of duty. While selling the goods, the manufacturer recovered the duty so paid. In doing so, an assessee is recouping the tax already paid. The arrangement is not that the assessee first collected the tax from the buyer of the goods and then remits the amount to the government. Section 11D has to be read keeping this scheme in view. 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. The real identity of the amount 'collected' (whether excise duty payable or not) is of no relevance for Section 11D. What is relevant is only whether the collection was 'represented' as duty of excise. The representation may as well be entirely false. The qualifying of the representation through the words 'in any manner' makes this clear. Therefore, the contentions of both sides on the question, as to whether deposits under Rule 57CC are excise duty or not, are beside the point. In the result, this Larger Bench confirm the view taken by the Tribunal in the case of Nu-Wave Shoes 2000 (9) TMI 193 - CEGAT, NEW DELHI . Reference is answered as above and the appeals are returned to the original Bench for disposal.
Issues involved:
Interpretation of whether the recovery of 8% from buyers by the assessee, debited from RG-23A Part II, is required to be deposited with the Government under Section 11D of the Central Excise Act. Detailed Analysis: 1. Background and Facts: The assessees are involved in manufacturing both dutiable and non-dutiable steel products. They pay 8% while selling non-dutiable goods and recover this amount from buyers. The issue is whether this 8% recovery should be deposited with the Government under Section 11D. 2. Difference of Opinion: The reference arose due to conflicting views of different Division Benches. One bench held that no payment under Section 11D is necessary, while another bench took a contrary stance. 3. Arguments of the Parties: The assessees argued that depositing the 8% recovery would lead to double taxation, citing the Mafatlal Industries case. They contended that Rule 57CC payments are not excise duty, hence Section 11D does not apply. The Revenue argued that any recovery represented as duty should be deposited under Section 11D. 4. Decision and Reasoning: The Larger Bench analyzed the situation and found that the assessees had already paid the 8% amount to the revenue. As the assessees did not retain any amounts collected from buyers, Section 11D did not apply. They referenced the Nu-Wave Shoes case and the Mafatlal Industries judgment to support this view. 5. Interpretation of Section 11D: The scheme of Central Excise duty involves manufacturers recovering the duty already paid while selling goods. Section 11D applies when equivalent duty has not been deposited at the time of goods' removal. The focus is on not allowing manufacturers to unjustly benefit by falsely representing amounts as central excise duty. 6. Relevance of Representation: The actual nature of the collected amount (as duty or not) is irrelevant for Section 11D. The critical aspect is whether the collection was represented as excise duty, regardless of its accuracy. 7. Conclusion: The Larger Bench upheld the view of the Nu-Wave Shoes case, stating that since the 8% amount was already paid to the revenue and not retained by the assessee, Section 11D did not apply. The reference was answered accordingly, and the appeals were referred back for disposal.
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