2017 (1) TMI 1703 - HC - Central Excise

Court requires deposit of excess excise duty collected under incentive schemes to Government

COMMISSIONER OF CENTRAL EXCISE Versus KISSAN SAHKARI CHINI MILLS LTD.

The court ruled in favor of the Central Excise Department, holding that under incentive schemes, the appellant cannot retain excess excise duty collected ... Recovery of Excise duty - Whether the incentives granted to the appellant permit them to collect excise duty, more than they had themselves paid, from their customers, if they collected by way of excise duty more than what they had paid, then by virtue of Section 11D of Central Excise Act, 1944, were they bound to deposit that amount with the Government? HELD THAT:- While filing the monthly returns for the period September, 1991 to January, 1993, the assessee had collected central excise duty @ ₹ 85 per quintal on 84890 quintals of VP Sugar amounting to ₹ 72,15,650/- from the buyers but had deposited the Central Excise duty @ ₹ 52/- per quintal on the said quantity. It thus, becomes clear that the assessee had retained certain sums with them, which they had collected in excess. Therefore, a notice under Section 11D of the Central Excise Act, 1944 was issued for the recovery of the said amount. This very issue has been finally settled by Hon’ble Apex Court in KISAN SAHKARI CHINI MILLS LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, ALLAHABAD [2005 (3) TMI 124 - SUPREME COURT] where the Hon’ble Apex Court has held that under the incentive scheme, exemption of excise duty at the concessional rate has been granted to the assessee, but the Government order does not permit the assessee to collect more than what they have to pay to the Government under the scheme. If the assessee has collected excess excise duty, then it is bound to deposit such excess amount with the Government in view of the provisions of Section 11D of the Central Excise Act. The questions of law are, therefore, answered in favour of the department and against the assessee. Issues:1. Whether incentives allow the appellant to collect more excise duty than paid and retain the excessRs.2. Should the party be careful in their business practices as per the lawRs.Analysis:1. The case involves an appeal by the Central Excise Department under Section 35G of the Central Excise Act, 1944 for the period September, 1991 to January, 1993. The main issue is whether the appellant, who collected excise duty at a higher rate than paid, is required to deposit the excess amount with the Government as per Section 11D of the Central Excise Act, 1944.2. The appellant had collected excise duty at a rate of Rs. 85 per quintal from buyers but had only deposited duty at Rs. 52 per quintal. This resulted in the retention of excess amounts by the appellant. A notice was issued under Section 11D for the recovery of the surplus collected amount, leading to a legal dispute.3. The court referred to a previous decision by the Hon'ble Apex Court, which clarified that under incentive schemes, the assessee cannot collect more excise duty than what is due to the Government. If excess duty is collected, it must be deposited with the Government, as mandated by Section 11D of the Central Excise Act.4. The appellant's reliance on a previous court decision was noted, but the court upheld the principle established by the Hon'ble Apex Court regarding the obligation to deposit excess excise duty collected. The questions of law were answered in favor of the department and against the assessee.5. Ultimately, the court allowed the appeal in favor of the department, emphasizing the importance of complying with the provisions of the Central Excise Act. No costs were awarded in this judgment.