2017 (5) TMI 1297 - AT - Central Excise

Appellant must deposit excess duty under Central Excise Act; penalty set aside, case remanded for demand recalculation.

The Tribunal held that the appellant must deposit excess duty collected from customers with the Government under Section 11D of the Central Excise Act, ... Recovery of excess duty - Section 11D(2) of the CEA, 1944 - the appellant had cleared the inputs as such on payment of duty, adopting transaction value, instead of reversing the credit availed on such inputs at the time of its receipt in the factory - Held that: - the Gujarat Hon’ble High Court after considering the relevant provision in similar facts and circumstances in Inductortherm (I) Pvt. Ltd.'s case [2012 (12) TMI 856 - GUJARAT HIGH COURT], observed that the excess amount collected from the customers is required to be deposited u/s 11D of the CEA, 1944 - the amount collected from the customers in excess as duty is required to be deposited u/s 11D of CEA,1944 with the department. Whether the demand for the period March 2003 to February 2007 can be enforced when the demand notice was issued on 14.9.2007? - Held that: - in absence of time limit prescribed for recovery, a reasonable period, be applied for recovery of the amount - Pratibha Syntex Ltd. vs. UOI [2013 (3) TMI 480 - GUJARAT HIGH COURT] observed that judging the period of limitation from the armchair of a reasonable person under no circumstance more than three years period could be considered as a reasonable period for effecting recovery of the amount. Therefore, recovery could be effected for three years from the date of issue of show cause notice. The matter is remanded to the adjudicating authority for calculation of the demand afresh - appeal allowed by way of remand. Issues:1. Recovery of excess duty paid by appellant for clearing inputs 'as such'.2. Applicability of Section 11D of the Central Excise Act, 1944.3. Bar of limitation for enforcing demand notice issued on 14.9.2007.4. Imposition of penalty on the appellant.Analysis:1. The appellant cleared inputs 'as such' between March 2003 to February 2007, paying duty on transaction value without reversing the credit availed at the time of receipt in the factory. A demand notice was issued for recovery of excess duty paid, which was collected from customers under Section 11D(2) of the CEA, 1944. The appeal was filed against the order confirming the demand with penalty and interest. The appellant contended that the excess amount collected from customers was already paid to the Department, and the demand for recovery was beyond the reasonable period of limitation.2. The appellant argued that the excess amount collected from customers as duty was not required to be deposited again as it had already been paid to the Department. Citing judgments from various High Courts and Tribunal decisions, the appellant contended that recovery under Section 11D should be within a reasonable time period. The Revenue, on the other hand, relied on the judgment of the jurisdictional High Court to support the requirement of depositing excess amounts collected from customers with the Government.3. The Tribunal analyzed the provisions of Section 11D of the CEA, 1944, emphasizing the obligation of a person collecting duty in excess to pay it to the Central Government. Referring to relevant case laws, the Tribunal held that the excess amount collected as duty needed to be deposited with the department under Section 11D. Regarding the limitation for enforcing the demand notice issued in 2007, the Tribunal observed that recovery could be effected for three years from the date of the show cause notice. The matter was remanded to the adjudicating authority for recalculating the demand in light of this observation.4. The Tribunal found no justification for imposing a penalty on the appellant and set aside the penalty. The appeal was disposed of with the direction for recalculation of the demand and the removal of the penalty.