By TIOL News Service

MUMBAI, DEC 28, 2017: APPELLANT is a manufacturer of sugar, molasses, denatured alcohol etc. and had also been clearing exempted products such as bagasse, press mud and boiler ash. In accordance with rule 6 of CCR, 2004 and recognizing the difficulty in maintaining separate accounts of duty/tax paid on input services and inputs used in common for manufacture of dutiable goods and exempt goods, the appellant opted for the regularization method of payment of 5%/6% of the value of the exempted goods.

However, these amounts were collected by the appellant from their consignees.

The original authority held that these amounts are recoverable in terms of section 11D of the CEA, 1944.

The Commissioner (Appeals)declined to interfere with the order of the original authority that confirmed the recovery of Rs.2,67,978/- and other detrimental consequences.

The appellant is before the CESTAT and submits that the amount payable on the value of exempted goods is permitted to be collected from customers as per the CBEC Circular no. 870/8/2008-CX dated 16th May 2008. Reliance is also placed on the decision of the Larger Bench of the Tribunal in Unison Metals Ltd - 2006-TIOL-1337-CESTAT-DEL-LB.

The CESTAT observed –

"…On a perusal of the provisions of section 11D of Central Excise Act, 1944, it is seen that the enforcement mechanism is triggered in relation to duties; the amount payable under rule 6 of CENVAT Credit Rules, 2004 is not a duty."

Concluding that the proceedings against the appellant do not survive, the impugned order was set aside and the appeal was allowed.

(See 2017-TIOL-4556-CESTAT-MUM)