2003 (11) TMI 169 - AT - Central Excise

Tribunal Orders Excess Duty Collected Must Be Deposited with Government, No Time-Limit for Recovery Imposed.

The Tribunal upheld the demand against the Appellants under Section 11D of the Central Excise Act, determining that the amount collected from customers ... Demand - Limitation - Excess duty collected from buyer - Imposition of Penalty - Whether the provisions of Section 11D of the Central Excise Act are attracted - HELD THAT:- It is also not disputed by the Appellants that they had collected duty at the rate of 8% ad valorem from their customers while selling the exempted products. Thus this amount of duty collected from the customers is in excess of the duty leviable on the goods. Section 11D of the Central Excise Act as amended by Section 103 of the Finance Act, 2000, provides that every person who has collected any amount in excess of the duty assessed or determined and paid on any excisable goods, from the buyers shall pay the amount so collected to the credit of the Central Government. As the duty assessed is nil in view of the exemption, the entire amount collected by the Appellants is liable to be paid to the Central Government. With due respect, we differ from the view taken in the case of Nuo Wave Shoes as perhaps the Tribunal was not informed the correct nature of the amount paid by the manufacturer at the rate of 8% at the time of clearance of the exempted goods. It is apparent from sub-section (2) of Section 11D which shall be deemed to have come into effect from 20th day of September, 1991, no time-limit is specified for demanding the duty and the machinery to recover the duty is provided in the Section itself. We, therefore, uphold the demand against the Appellants. Thus, we do not find it to be a fit case for imposing any penalty. Accordingly we set aside the entire penalty. The Appeal is disposed of in the above terms. Issues involved: The appeal filed by M/s. Vimal Moulders (I) Ltd. revolves around whether the provisions of Section 11D of the Central Excise Act are attracted.Details of the Judgment:Issue 1: Interpretation of Section 11DThe Appellants argued that the amount deposited under Rule 57CC is not duty, hence Section 11D does not apply. They contended that they have already paid the amount to the Government and collected it from customers. They cited a Tribunal decision to support their stance. They also claimed that the extended period of limitation cannot be invoked due to regular compliance with filing returns. The Department argued that the amount collected from customers is in excess of duty and must be deposited with the Government as per Section 11D. They emphasized that the payment made is towards Modvat credit and not duty. The Tribunal noted the amended Section 11D without a specified time-limit for recovery.Issue 2: Compliance with Rules and Duty PaymentThe Tribunal observed that the Appellants availed Modvat credit on inputs used for both dutiable and exempted products. Rule 57C prohibits credit on inputs used for exempted products. The Appellants paid 8% of the price of exempted goods at clearance, in lieu of Modvat credit. The collected duty from customers was deemed excess as the assessed duty was nil. The Tribunal disagreed with a previous Tribunal decision due to a misunderstanding of the nature of the payment made by the manufacturer.Conclusion:The Tribunal upheld the demand against the Appellants under Section 11D, noting the absence of a time-limit for duty recovery post-amendment. However, no penalty was imposed considering the circumstances. The Appeal was disposed of accordingly.