Section 11D Central Excise Act not applicable when no duty recovered from buyers despite exemption availment

CESTAT Chandigarh held that Section 11D of Central Excise Act was not applicable as no amount representing excise duty was recovered from buyers. The appellant's invoices after availing area-based exemption clearly mentioned "exempted" against duty column, showing no duty was charged to customers. Following precedent from Pitambar Coated Paper Ltd case, tribunal found no evidence of duty collection from buyers. Additionally, SCN issued after five years exceeded reasonable time limitation for recovery under Section 11D. The impugned order was set aside and appeal allowed.

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Issues:
1. Interpretation of Section 11D - Recovery of excise duty from customers.
2. Applicability of Section 11D to goods exempt from duty.
3. Bar of limitation for recovery under Central Excise Act.

Analysis:

Issue 1: Interpretation of Section 11D - Recovery of excise duty from customers
The case involved a dispute regarding the recovery of excise duty from customers by the appellant. The department alleged that the appellant collected amounts representing excise duty from customers even after availing exemption under Notification No.50/03-CE. The appellant argued that no amount representing duty was charged from customers, as invoices clearly mentioned the exemption and no duty was shown against the column of "B.E.D @ 16%." The Tribunal, after considering the submissions and precedents, found that Section 11D was not applicable as no duty amount was recovered from buyers. The Tribunal cited the Pitambar Coated Paper Ltd. case to support its decision, emphasizing the need for evidence of duty collection from buyers for invoking Section 11D.

Issue 2: Applicability of Section 11D to goods exempt from duty
The appellant contended that Section 11D did not cover goods wholly exempt or chargeable to Nil rate of duty before 2008. They relied on the Everest Industries Ltd. case to support this argument. The Tribunal agreed with the appellant, stating that Section 11D did not apply to goods fully exempt from duty. The Tribunal highlighted that the appellant did not collect any amount representing excise duty and, therefore, the demand was not sustainable under Section 11D.

Issue 3: Bar of limitation for recovery under Central Excise Act
The appellant also argued that the recovery proceedings were time-barred as the show cause notice was issued after more than five years from the relevant period. The appellant relied on the decisions of CCE Vs. Hari Concast Pvt. Ltd. and CCE Vs. Bharat Sanchar Nigam Ltd. to support their contention. The Tribunal agreed that the recovery sought after more than five years was beyond a reasonable period. The Tribunal held that the impugned order was not sustainable in law and set it aside, allowing the appeal of the appellant with consequential relief, if any, as per law.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that no duty amount was collected from customers, Section 11D did not apply to fully exempt goods, and the recovery proceedings were time-barred. The impugned order was set aside, and the appeal of the appellant was allowed.

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