2024 (8) TMI 1400 - AT - Central Excise

Appellant wins appeal as Section 11D demand set aside after SAD credit reversal under Rule 3(5)

Grauer And Weil India Ltd Versus Commissioner of C.E & S.T. -Silvasa

CESTAT Ahmedabad allowed the appeal against demand under Section 11D of Central Excise Act. The appellant had reversed SAD credit under Rule 3(5) of ... Reversal of SAD in terms of Rule 3 (5) of Cenvat Credit Rules, 2004 - applicability of Section 11D when the SAD credit has been reversed but shown in the invoice - HELD THAT:- From the above rule 3 (5) it is clear that when any input is cleared as such whatever credit is availed on such input is required to be reversed. Therefore, the appellant have rightly reversed the amount equal to cenvat credit on such input. From the provision Section 11 D it is clear that any amount collected in excess of the duty assessed or determined and paid on any excisable goods under this Act or the rules made thereunder from the buyer of such goods in any manner as representing duty of excise, shall forthwith pay the amount so collected to the credit of the Central Government. This shows that any amount showing as excise duty collected but not paid shall be paid to the credit of Central Government. In the present case, admittedly the amount was determined and paid in terms of Rule 3 (5) of Cenvat Credit Rules, 2004. Therefore, the provisions of Section 11 D is not applicable. In the case of UNISON METALS LTD. VERSUS COMMISSIONER OF C. EX., AHMEDABAD-I [2006 (10) TMI 171 - CESTAT, NEW DELHI-LB], the larger bench of this tribunal held that 'The scheme of the law is that manufacturers shall not collect amounts falsely representing them as central excise duty and retain them, thus, unjustly, benefiting themselves. In the present cases, (irrespective of whether the 8% payments were duty or not) since the 8% amount remain already paid to the revenue, and no amount is retained by the assessee, Section 11D has no application.' In view of the above judgment, it is clear that once the amount of duty has been paid to the Government and the same is charged in the invoice, provisions of Section 11 D will not apply. The similar facts are available in the present case also in as much as the appellant have paid the amount shown in the invoice by reversing the credit in their Cenvat account. Therefore, in this fact the demand under Section 11 D is not sustainable. The impugned order is set aside - appeal allowed. Issues Involved:1. Whether the reversal of SAD credit under Rule 3(5) of the Cenvat Credit Rules, 2004, and its mention in the invoice as 'AED 100%' constitutes a procedural lapse.2. Whether the demand under Section 11D of the Central Excise Act, 1944, is applicable when the SAD credit has been reversed but shown in the invoice.Issue-wise Detailed Analysis:1. Procedural Lapse in Mentioning SAD Credit Reversal:The appellant, M/s Grauer & Weil (India) Ltd., reversed the SAD credit under Rule 3(5) of the Cenvat Credit Rules, 2004, and mentioned it in the invoice as 'AED 100%'. The show cause notice argued that the reversal of credit should not be passed on the invoice and that SAD is not an excise duty. The appellant contended that although the invoice did not specifically mention 'SAD credit reversed,' the fact of reversal was undisputed. The procedural lapse of not mentioning 'SAD credit reversed' should not sustain the demand.2. Applicability of Section 11D of the Central Excise Act, 1944:The show cause notice demanded recovery of the SAD portion under Section 11D, arguing that the amount shown in the invoice as 'AED 100%' was excess duty recovered from the buyer. The appellant argued that Section 11D is not applicable as the SAD credit was reversed, and the amount was shown in the invoice. They further argued that if SAD is considered a customs duty, the demand under Section 11D would not sustain, as Section 28B would be applicable.The tribunal noted that the appellant had taken credit of CVD and SAD upon receipt of inputs and reversed the same when the inputs were cleared. The tribunal referred to Section 11D, which mandates depositing any excess amount collected as excise duty with the Central Government. However, since the amount was reversed under Rule 3(5) and shown in the invoice, Section 11D was not applicable.Relevant Judgments:- Unison Metals Ltd. (2006): The tribunal held that Section 11D does not apply if the amount collected as duty is already paid to the revenue. Double taxation is not contemplated.- Kesoram Spun Pipes and Foundries Ltd. (2020): The Calcutta High Court held that if the manufacturer debits the CENVAT credit by the equivalent amount collected as duty, Section 11D is not applicable.Conclusion:The tribunal concluded that since the appellant had reversed the credit and shown the amount in the invoice, Section 11D was not applicable. The demand under Section 11D was set aside, and the appeal was allowed with consequential relief.Order:The impugned order was set aside, and the appeal was allowed with consequential relief. The judgment was pronounced in the open court on 29.08.2024.