2012 (6) TMI 246 - AT - Central Excise

Imported goods not excisable under Section 11D(1) of Central Excise Act

HINDUSTAN PETROLEUM CORPN LTD Versus COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH

HINDUSTAN PETROLEUM CORPN LTD Versus COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH - 2012 (279) E.L.T. 367 (Tri. - LB) Issues Involved:1. Whether imported custom duty paid goods falling in any of the Schedules to the Central Excise Tariff Act, 1985, would come within the ambit of the expression 'excisable goods' used in the text of sub-section (1) of Section 11D of the Central Excise Act.2. Whether the duty collected by the appellants on customs duty paid stock is recoverable under Section 11D(1) of the Central Excise Act.Issue-Wise Detailed Analysis:1. Interpretation of 'Excisable Goods' under Section 11D of the Central Excise Act:The core issue is whether imported custom duty paid goods listed in the Schedules to the Central Excise Tariff Act, 1985, qualify as 'excisable goods' as per sub-section (1) of Section 11D of the Central Excise Act. The Tribunal examined the definition of 'excisable goods' under Section 2(d) of the Central Excise Act, which includes goods specified in the Schedules to the Central Excise Tariff Act, 1985, subject to a duty of excise. The Tribunal also considered the scope of Entry 84 of the Union List in the Seventh Schedule, which limits excise duties to goods manufactured or produced in India.The Tribunal found that although imported goods are listed in the Schedules, they do not meet the criteria of being manufactured or produced in India. Therefore, imported custom duty paid goods do not fall within the ambit of 'excisable goods' as used in Section 11D(1) of the Central Excise Act.2. Recoverability of Duty Collected on Customs Duty Paid Stock:The appellants, public sector undertakings, were involved in the storage and clearance of petroleum products, including imported and indigenous goods. The issue arose when the appellants collected amounts representing excise duty on customs duty paid goods but did not credit these amounts to the Central Government. The appellants argued that they are not liable to pay the duty collected under Section 11D(1) as they are not the manufacturers of the goods.The Tribunal referred to the Andhra Pradesh High Court's decision in Laxmi Starch Ltd. v. Union of India, which held that 'every person' in Section 11D(1) should be interpreted as the manufacturer/producer/importer. The Tribunal also noted that the Central Board of Excise and Customs (CBEC) had clarified that duty under Section 11D(1) is recoverable only from the manufacturer.The Tribunal further cited previous decisions, including BPCL v. Commissioner of Central Excise, Meerut, and Manager (Terminal), IOCL v. Commissioner of Central Excise, Visakhapatnam, which supported the view that amounts collected as duty on imported goods are not recoverable under Section 11D(1) if the collector is not the manufacturer.Separate Judgments:The judgment delivered by Sahab Singh, Member (T), differed from the majority opinion. He emphasized that only goods manufactured or produced in India are subject to central excise duty, and therefore, imported customs duty paid goods do not qualify as 'excisable goods' under Section 11D(1). Consequently, he disagreed with the reference made by the Referral Bench.Conclusion:In view of the majority decision, the Tribunal concluded that imported customs duty paid goods are excisable goods, but duty under Section 11D(1) is payable only by the manufacturer, producer, or importer. Since the appellants are not manufacturers, they are not liable to pay the duty collected under Section 11D(1) of the Central Excise Act. The reference was answered accordingly, and the case was directed to be placed before the Referral Bench for further proceedings in line with this decision.