CX - Whether price is higher or lower during exemption and thereafter cannot alone be ground to hold that appellant has collected amount representing excise duty: CESTAT
By TIOL News Service
MUMBAI, MAY 29, 2018: THE appellants were availing SSI exemption in terms of Notification no. 1/93 dated 28.2.1993 and under Notification no. 16/97 dated 01.04.1997.
It was noticed by the jurisdictional authorities that the price charged on the final product is same, both, during the full exemption limit and even during payment of the excise duty.
The case of the department, therefore, is that during the course of exemption, the price charged to the customer is inclusive of excise duty and, therefore, excise duty is recoverable under section 11D of the Central Excise Act, 1944.
In the matter of the Stay application filed by the appellant against confirmation of the demand, the CESTAT, remarked that a ‘lenient view' is taken on an over-all consideration and accordingly directed the applicant/appellant to make a pre-deposit of Rs.3.5 lakhs against a total duty demand of Rs.7,75,358/- and a penalty of Rs.1 lakh.
The CESTAT had then observed –
++ We note that the relevant show cause notice clearly brought out the amount of duty payable by the assessee during the period of dispute in terms of the relevant SSI notifications. The show cause notice relied upon the central excise records as well as the register maintained by the assessee.
++ It also disclosed the amount of duty actually paid by the assessee for the said period. Thus, the amount of duty collected by the assessee from their customers and not paid to the Revenue was worked out.
++ The appellant has not been able to rebut this case of the Revenue by producing relevant records.
++ Prima facie, it appears, certain amount of duty collected from the customers were not paid to the exchequer, and, therefore, section 11D of the Act was invocable in this case. As rightly pointed out…, the machinery provisions were made with retrospective effect for recovery of such amount.
++ The plea of financial hardships is not adequately supported.
We reported this order as 2009-TIOL-1516-CESTAT-MUM.
The appeal was heard recently.
The appellant submitted that the department is confused only for the reason that the appellant charged the same price before and after the crossing of SSI exemption limit ; that as per the invoice i.e. commercial invoice and Central Excise invoice during the clearance up to Rs.30 lakhs, no excise duty is shown to have been charged to the customer; that the appellant have not collected the excise duty from the customers during the exemption limit of Rs.30 lakhs; that Section 11D is applicable only when the assessee collects the amount representing as excise duty and does not deposit to Govt. exchequer, which is not a case here; that there is no suppression of facts on part of the appellant, therefore, the extended period is not invokable and so also is penalty.
The AR reiterated the stand taken by the department and that is that during the full exemption limit of Rs.30 lakhs and thereafter the price of the goods remained same, therefore, it is clear that before and after exemption, the appellant have charged the same price which is inclusive of excise duty; therefore, the excise duty stands collected by the appellant and demand u/s 11D was rightly made by the lower authority. Reliance is also placed on the decision in Katralla Products Pvt. Ltd. – 2008-TIOL-1321-CESTAT-MAD.
The Bench considered the submissions and observed –
++ We find that the fact is not in the dispute that during the exemption limit, the same price was charged towards the sale of the goods, but during the exemption limit, the appellant have not shown the excise duty either in the excise invoice or in the commercial invoice to show that the appellant have collected the amount in the name of excise duty during the exemption limit, whatsoever the price was charged, therefore, the price for sale of the goods and no element of excise duty was involved.
After extracting the provisions of section 11D(1) of the CEA, 1944, the Tribunal further observed –
++ From the plain reading of the above section 11D, it can be seen that when any person who has collected any amount from the buyer of any goods in any manner is representing duty of excise, shall forthwith would pay amount so collected to the credit of the Central Government.
++ However, in the present case, no amount was collected representing duty of excise during the exemption limit. Whatever amount was collected that is towards the price of the goods, therefore, in absence of any amount collected by name of excise duty, no demand can be made under section 11D.
++ The Revenue's contention is only based on assumption that price during the exemption limit is inclusive of excise duty. Whether the price is higher or lower during the exemption and thereafter cannot be alone ground to hold that the appellant has collected the amount representing excise duty.
++ Section 11D can only be invoked if it is found that during the sale of the goods, part of the sale value is explicitly indicated as excise duty, which is not a case here.
Concluding that the demand raised u/s 11D was without any basis and hence is unsustainable, the impugned order was set aside and the appeal was allowed with consequential relief.
(See 2018-TIOL-1646-CESTAT-MUM)
