By TIOL News Service

NEW DELHI, FEB 24, 2015: DURING the period November 2002 to July 2003 the appellant supplied pre-stressed concrete pipes (PSC pipes)in terms of their contract with Rajasthan Public Health Engineering Department. The price was inclusive of all taxes and in terms of the contract the appellants were not to be reimbursed any taxes by the said buyer.

The appellant had claimed the duty exemption in terms of notification no. 6/02-CE (Sl. No. 196-A) available to pipes needed for delivery of water from its source to the water treatment plant or from there to the storage facility, subject to the condition specified in the notification. There is no dispute that the necessary certificates as mandated under the notification have been produced.

The jurisdictional authorities sought to deny the exemption and demanded CE duty of Rs.1,73,74,520/-.Besides this, the SCN also mentioned that since an amount of Rs.1,72,80,890/- has been recovered by the appellant from their buyers i.e. Rajasthan PHED, as representing excise duty which is in excess of the duty assessed on invoices and RT-12 returns and as the same had not been deposited with the Central Government as required under section 11D(1), the same is recoverable u/s 11D(2) of the CEA, 1944.

In adjudication, the CCE, Jaipur II allowed the exemption claimed under notification 6/2002-CE &resultantly dropped the duty demand of Rs.1.73croresbut at the same time confirmed the demand raised u/s 11D of the CEA, 1944.

The appellant is before the CESTAT with an application for stay.

It is submitted that the supply of PSC pipes was to be made at a consolidated rate which was to be inclusive of octroi and all taxes and duties and no payment was to be made by PHED separately towards any variation in taxes; that as they had claimed exemption under notification No. 06/02-CE, the rate of duty and duty payable has been shown as nil and there is no question of recovery of any amount towards duty by the appellant from PHED. Reliance is also placed on the Tribunal decision in Simco Ltd. where it is held that when the price was a lump sum amount with usual condition that the rates are inclusive of all the duties and taxes, no presumption can be made that the rates also included the excise duty; that section 11D becomes applicable only when there is clear evidence that the assessee has collected any amount from the customer which is in excess of the excise duty assessed or determined or paid. Arguing that they have a strong prima facie case in favour, it was pleaded that the pre-deposit be waived.

The AR reiterated the findings of the adjudicating authority.

The Bench after narrating the factual position observed -

++ The point of dispute is as to how it is to be determined as to whether an assessee has collected an amount representing excise duty from his customers, which is the excess of the duty assessed and paid.

++ In our prima facie view, section 11D has to be read with section 12A and 12B.

++ Thus, when an assessee in the invoices issued by him to his customers mentions an amount as excise duty, a presumption can be made that that amount had been recovered by him from the customer as excise duty and only in that case section 11D can be invoked if that amount had not been paid to the Central Government.

++ In this case in all the Central Excise invoices placed on record by the appellant, excise duty payable is shown as Nil.

++ Therefore, merely from the contract terms providing that the price at which the pipes are to be supplied shall be inclusive of all the taxes, it cannot be presumed that the price also included excise duty.

Holding that the Bench is of the prima facie view that the order demanding an amount of Rs.1,72,80,890/- from the appellant u/s 11D is not correct and that ordering pre-deposit would result in undue hardship to the appellant, the Bench waived the pre-deposit and stayed the recovery.

The stay application was allowed.

(See 2015-TIOL-387-CESTAT-DEL)