2019 (6) TMI 735 - AT - Central Excise

Tribunal overturns order, citing lack of excise duty evidence, goods exemption, new notice, and time limit.

M/s. Everest Industries Ltd. Versus Commissioner of Central Excise

The Tribunal set aside the impugned order, finding the demand unsustainable on merits because no amount was shown as representing excise duty in the ... Demand u/s 11D - Collection of duty on exempted goods - price not reduced - Exemption from N/N. 60/91-CE as amended from time to time - Fly Ash - It is the case of the department that as the price charged for the exempted products (UT products) was the same as that of the other products on which excise duty was paid, an amount by way of excise duty was indirectly collected by the assessee from their customers and such amount needs to be deposited in the Government exchequer under Section 11D of the Central Excise Act, 1944. HELD THAT:- Section 11D of the Central Excise Act required during the relevant period of every person who is liable to pay duty under this Act or Rules and has collected any amount in excess of the duty assessed or determined and paid on any excisable goods in any manner as representing duty of excise to forthwith pay such amount to the Central Government. Evidently, it did not cover the goods which are only wholly exempt from duty but on which manufacturer collects some amount as representing Central Excise duty. This lacuna was corrected by introduction of Section 11D (1A) in 2008. The Budget speech of the Hon’ble Finance Minister for the year referred to above clarifies that prior to 2008 this Section 11D did not cover those goods where the goods were wholly exempted or were chargeable to Nil rate of duty as in the present case. The liability to Section 11D does not apply to the appellant’s goods because undisputedly, the products were fully exempted from payment of duty. A plain reading of Section 11D also shows that what is required to be deposited in the Government exchequer is any amount collected as representing excise duty. In this case there is nothing on record that they have collected any amount as representing excise duty. Such passing of incidence can be direct or indirect. Section 11D cover only cases where any amount is collected as representing excise duty. In this case, none of documents presented before us show any amount was collected as representing excise duty - Appeal allowed - decided in favor of appellant. Issues Involved:1. Applicability of Section 11D of the Central Excise Act, 1944.2. Collection of amounts representing excise duty.3. Principle of res judicata.4. Time limit for issuing show cause notices under Section 11D.Detailed Analysis:1. Applicability of Section 11D of the Central Excise Act, 1944:The appellants were manufacturers of Asbestos Cement products, some of which used more than 25% Fly Ash and were exempt from excise duty under Notification No.60/91-CE. The department argued that the appellants collected amounts indirectly representing excise duty from their customers and should deposit these amounts under Section 11D. However, the Tribunal noted that Section 11D did not cover goods wholly exempt from duty until the introduction of Section 11D (1A) in 2008. The amendment was not retrospective, thus not applicable to the appellant’s goods for the period in question.2. Collection of Amounts Representing Excise Duty:The department contended that the appellants charged the same price for both duty-paid and exempted products, implying that they collected amounts representing excise duty. The Tribunal found no evidence that the appellants collected any specific amount as excise duty. The invoices showed a consolidated price 'inclusive of excise duty,' but no specific amount was indicated as excise duty. The Tribunal concluded that Section 11D could not be invoked unless an amount was clearly shown as representing excise duty.3. Principle of Res Judicata:The original show cause notices (SCNs) were quashed by the Hon’ble High Court of Madras, but the department issued a new SCN after the amendment of Section 11D. The Tribunal found that the principle of res judicata did not apply because the new SCN was issued under amended provisions, as allowed by the High Court’s judgment. The original SCNs were treated as non est, making the new SCN the first round of litigation under the amended law.4. Time Limit for Issuing Show Cause Notices Under Section 11D:The SCN was issued on 07.09.2011 for the period February 1992 to December 1995, well beyond the five-year period typically considered under Section 11A. The Tribunal noted that while Section 11D had no specific time limit, the Hon’ble High Court of Allahabad in CCE Vs Standard Niwar Mills held that the limitation under Section 11A should apply to Section 11D. Thus, the Tribunal found the demand time-barred.Conclusion:The Tribunal set aside the impugned order, finding the demand unsustainable on merits because:- No amount was shown as representing excise duty in the appellant’s documents.- The goods were fully exempt from duty and not covered by Section 11D until 2008.- The principle of res judicata did not apply due to the issuance of a new SCN under amended provisions.- The demand was time-barred as per the limitation period under Section 11A.The appeal was allowed with consequential benefits as per law.