By TIOL News Service

MUMBAI, MAR 16, 2017: THE respondent is engaged in the ‘manufacture' of thinner wire from thicker wire by the process of drawing wire rods. They are availing CENVAT Credit on the wire rods and paying excise duty on the final products i.e. drawn wire.

The case of the department is that since at the relevant time, drawing of wire did not amount to manufacture, the appellant's activity is not excisable activity. Therefore, they were not supposed to charge excise duty and since they charged excise duty and collected the same from their customers, the same is liable to be recovered u/s 11D of the CEA, 1944.

The adjudicating authority confirmed the demand of duty u/s 11D but, in appeal, the Commissioner(A) set aside the same.

And, therefore, the Revenue is before the CESTAT seeking to justify the demand.

The AR submitted that since wire drawing activity was not amounting to manufacture at the relevant time, appellant was not supposed to pay CE duty and collect the same from the customers and, therefore, the amount collected is required to be credited in the Government's account in terms of section 11D of CEA, 1944.

The Bench observed -

"…From the plain reading of the above Section 11D, the amount under Section 11D can be recovered only in a case where the assessee collected any amount in excess of duty assessed or determined and paid on any excisable goods from the buyer of such goods, in any manner, as regards duty of excise. Therefore, even if any excise duty the assessee collected from the buyers of the goods and if the same has been paid to the Governments account, Section 11D has no application. In the present case, the duty was assessed by the respondent and the same was paid to the Govt. account. Therefore, no amount remained to be paid to attract Section 11D."

Noting that the lower appellate authority had given detailed findings on similar lines, the CESTAT held that there was no substance in the appeal.

The Revenue appeal was dismissed.

(See 2017-TIOL-843-CESTAT-MUM)