2011 (2) TMI 1072 - AT - Central Excise

Appellate Tribunal rules Section 11D inapplicable to Cenvat Credit recovery, setting aside lower authority decision.

The Appellate Tribunal held that Section 11D of the Central Excise Act is not applicable when an assessee pays an amount under the Cenvat Credit Rules and ... Goods cleared at Nil rate of duty - Subsequently assessee raised supplementary invoices and recovered the amount reversed under Rule 6(3)(b) from their customers - Department was of the view that the said amount collected from the buyers by the appellant is recoverable under section 11D of the Central Excise Act as it represents duty of excise collected from the buyers in terms of the Board's Circular No. 599/36/2001-CX dated 12-11-2001 wherein it has been clarified that the provisions of section 11D gets attracted when any amount representing excise duty is recovered from the buyer on the basis of documents - Held that:- In the case of Unison Metals Ltd. Case (2006 (10) TMI 171 - CESTAT, NEW DELHI) assessee had paid 8% of the value of the goods in terms of Rule 57CC at the time of removal from the factory. The amounts so paid were recovered from their buyers and in the sales documents the amount was described in different terms such as '8% reversal of assessable value', '8% value' , '8% duty' etc. Since the amounts so collected from the buyers did not remain unpaid to the revenue and no amount was retained by the assessee, the Tribunal Larger Bench held that section 11D has no application, provisions of section 11D of the Central Excise Act, 1944 is not attracted in the facts of the present case, order set aside of the lower appellate authority and appeal allowed Issues:1. Whether the recovery of an amount under Rule 6(3)(b) of the Cenvat Credit Rules, which was subsequently collected from buyers, attracts Section 11D of the Central Excise Act.2. Interpretation of Section 11D in cases where an assessee pays an amount for exempted clearances under the Cenvat Credit Rules and recovers the same from buyers.Detailed Analysis:1. The case involved an assessee who cleared excisable goods at Nil rate of duty and reversed an amount in their Cenvat account under Rule 6(3)(b) of the Cenvat Credit Rules. Subsequently, they recovered this amount from customers, which the Department contended was recoverable under Section 11D of the Central Excise Act. The adjudicating authority confirmed the demand, leading to an appeal before the Commissioner (Appeals) and eventually the Appellate Tribunal. The Tribunal considered various judgments and held that Section 11D is not attracted when an assessee pays an amount under Cenvat Credit Rules and recovers the same from buyers, citing Circular 870/8/2008-CX and precedents like Union Metals Ltd. and Welspun Gujarat Stahl Rohren Ltd. The Tribunal concluded that Section 11D does not apply in such cases and allowed the appeal, setting aside the lower authority's order.2. The Tribunal analyzed the legal position regarding the application of Section 11D in cases where an assessee pays an amount for exempted clearances under Cenvat Credit Rules and subsequently recovers it from buyers. Citing Circular 870/8/2008-CX and various judgments including Union Metals Ltd. and Welspun Gujarat Stahl Rohren Ltd., the Tribunal held that Section 11D is not attracted in such scenarios. The Tribunal emphasized that as long as the amount is paid to the government as per the rules, even if recovered from buyers, Section 11D does not apply. This interpretation was consistent with precedents and the circular issued by the Central Board of Excise & Customs. Consequently, the Tribunal allowed the appeal, providing consequential relief to the appellant based on the established legal position.