2011 (4) TMI 900 - AT - Central Excise

Tribunal rules in favor of respondent on duty collection and adjustment

CCE, Panchkula Versus Yamuna Gages & Chemicals

CCE, Panchkula Versus Yamuna Gages & Chemicals - TMI Issues Involved:1. Right to realize duty from buyers on non-manufactured and non-dutiable goods (CJK).2. Obligation to deposit duty realized on non-dutiable goods into the treasury.3. Entitlement to adjust duty payable on intermediate goods against duty paid on non-dutiable goods (CJK).Comprehensive Issue-Wise Detailed Analysis:1. Right to Realize Duty from Buyers on Non-Manufactured and Non-Dutiable Goods (CJK):The Tribunal addressed whether the respondent had the right to realize duty from buyers on CJK, which were not manufactured and not dutiable as held by the Tribunal and affirmed by the Apex Court. The Tribunal found that prior to the judgment, the respondent was paying duty on CJK, treating them as excisable. The respondent continued paying duty even after the favorable judgment. Since central excise duty is an indirect tax, the respondent could recover the same from customers. The Tribunal concluded that the respondent had the right to realize duty from buyers on CJK during the period they were paying duty.2. Obligation to Deposit Duty Realized on Non-Dutiable Goods into the Treasury:The Tribunal examined whether the respondent should deposit the duty realized on CJK into the treasury following the Apex Court's ratio in Sahakari Khand Udyog Mandal Ltd. The Tribunal noted that the respondent paid the duty collected from customers to the Government, thus complying with Section 11 D of the Central Excise Act, 1944. Since the amount collected as duty was paid to the Government, there was no contravention of Section 11 D, and the respondent was not required to deposit any additional amount into the treasury.3. Entitlement to Adjust Duty Payable on Intermediate Goods Against Duty Paid on Non-Dutiable Goods (CJK):The Tribunal considered whether the respondent was entitled to adjust the duty payable on intermediate products against the duty paid on CJK. The department argued that such adjustment would amount to a refund, resulting in unjust enrichment. However, the Tribunal found that unjust enrichment occurs when an amount representing duty is collected from customers and either not paid to the Government or refunded to the assessee. In this case, the duty collected was paid to the Government, and no refund was being sought, only an adjustment of the duty paid on CJK against the duty liability on intermediate products. The Tribunal concluded that this adjustment did not amount to unjust enrichment and was permissible, agreeing with the Member (Technical).Conclusion:The Tribunal ruled that the respondent had the right to realize duty from buyers on CJK, was not required to deposit additional amounts into the treasury under Section 11 D, and was entitled to adjust the duty payable on intermediate products against the duty paid on CJK. The reference was disposed of accordingly.