TaxTMI 
TaxTMI 
2024 (8) TMI 1400
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....invoice in terms of Rule 9 of Cenvat Credit Rules, 2004, wherein they have charged the said CVD and Cess as "Excise duty 100%" and SAD as "AED 100%". The audit report as well as show cause notice admits that the amount charged by the appellant in the invoice is the CVD and SAD portion which the appellant has reversed in terms of Rule 3(5) of the Cenvat Credit Rules, 2004. 1.2 The show cause notice was issued to recover the said SAD portion on the ground that the reversal of credit means taking cost to oneself and adjusting by debiting own account and not passing further and thereby appellant should have reversed the credit without passing/recovering on invoice. Furthermore, SAD is not an excise duty as same has not been prescribed in the statue i.e. section 3 of the Central Excise Act and further amount reversed in terms of Rule 3(5) cannot be considered as duty and thus charging of said SAD portion will be considered as excess duty recovered from the buyer and same needs to be recovered under Section 11D of Central Excise Act, 1944. Therefore the present appeal. 2. Shri Mehul Jivani, Learned Chartered Accountant appearing on behalf of the Appellant submits that the appellant hav....
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....hat at the time of receipt of the inputs the appellant have taken credit of CVD as well as SAD and when the same inputs were cleared as such the appellant have issued the invoice to their other units. Some copy of the invoice is scanned below : - 4.1 From the above invoice, it can be seen that against CVD it was mentioned "Excise duty 100%" and against SAD it was mentioned as "AED 100%". However, admittedly both these duties which were availed as cenvat credit were reversed in terms of Rule 3 (5) while issuing the invoice. Therefore, the demand was confirmed under Section 11D in respect of SAD shown in the invoice issued under Rule 9 of Cenvat Credit Rules, 2004. The Section 11 D and Rule 3 (5) is reproduced below:- 11D. Duties of excise collected from the buyer to be deposited with the Central Government.-- (1) Notwithstanding anything to the contrary contained in any order or direction of the Appellate Tribunal or any Court or in any other provision of this Act or the rules made thereunder, 2[every person who is liable to pay duty under this Act or the rules made thereunder, and has collected any amount in excess of the duty assessed or determined and paid on any excisable g....
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....uch 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. This issue has been considered in various judgments as follows:- a) In the case of Unison Metals Ltd. 2006 (204) E.L.T. 323 (Tri.- LB), the larger bench of this tribunal held as under :- "5. The contention of the learned counsel for the assessee is that the question of payment under Section 11D cannot arise in a case where the recovery from the buyer of the goods is in lieu of the amount paid to the reve....
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....s as duty or not. In fact, the invoices referred to the payment in different terms such as "8% reversal of assessable value", "8% value", "8% duty etc." As the amounts recovered from the buyers are not retained by the assessees, the question of deposit cannot arise, whether under Section 11D or any other provision. A reading of Section 11D makes it clear that what is required is that amounts collected as duty should not be retained by the manufacturers and should be deposited with the revenue. This was the view that Division Bench took in the case of Nu-Wave shoes. We may read the relevant part of that order: "Admittedly, Rule 57CC(1) is applicable in the present case. It is not the case of the Department that the assessees have been charging an amount over and above 8 of the price of the exempted variety of footwear from their customers and in fact, the show cause notice proceeds on the basis that only the amount reversed by debit in the credit account from 1-9-1996 to April, 1997 has been charged from the customers. For the period 23-7-1996 to 31-8-1996, the show cause notice itself recognises that the assessees have been reversing Modvat credit proportionately on a prorata bas....
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....ion to pay the full duty according to law. This is the general purport and meaning of Section 11D. These may be case where goods are removed/cleared without effecting their sale. In such a case Section 11D is not attracted. It is attracted only when goods are sold. The purport of this section is in accord with Section 11B and cannot be faulted." 9. The scheme of Central Excise duty payment is that a manufacturer removed goods from the factory of production after payment of duty. While selling the goods, the manufacturer recovered the duty so paid. In doing so, an assessee is recouping the tax already paid. The arrangement is not that the assessee first collected the tax from the buyer of the goods and then remits the amount to the government. Section 11D has to be read keeping this scheme in view. Therefore, the provisions for "every person who is liable to pay duty........ and has collected any amount from the buyer of any goods in any manner representing as duty of excise, shall forthwith pay the amount so collected to the credit to the Central Government" has application only when equivalent duty had not been deposited at the time of removal of the goods. The scheme of the law....
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....amount equal to ten per cent. of the total price, excluding sales tax and other taxes, if any, paid on such goods, of the exempted final product charged by the manufacturer for the sale of such goods at the time of their clearance from the factory;" 8. There are Explanations which apply to the entirety of Rule 6(3) of the said Rules, including the following first Explanation : "The amount mentioned in conditions (a) and (b) shall be paid by the manufacturer or provider of output service by debiting the CENVAT credit or otherwise." 9. According to the appellant, the appellant calculated the 10% in terms of Rule 6(3)(b) of the said Rules of 2004 and passed it on to the purchasers of the relevant goods from the appellant; but instead of depositing such amount of 10% collected from the purchasers of the appellant's exempted goods, the appellant debited the equivalent amount from the CENVAT credit obtained by the appellant. There is no dispute that the debit of the CENVAT credit matched the amount recovered by the assessee on account of excise duty from its vendors. However, the adjudicating authority found that such a procedure could not have been adopted by the assessee as the a....
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....ext of the circular that was then applicable, is of relevance : "8. In the present case, it is not in dispute that the assessees had paid 8% of the value of the goods in terms of Rule 57CC at the time of removal of the goods from the factory. The amounts so paid are the amounts recovered by them from their buyers. Thus, in the present cases, no amounts collected from the buyers remain unpaid to the revenue, irrespective of whether those amounts were represented in the sales documents as duty or not. In fact, the invoices referred to the payment in different terms such as "8% reversal of assessable value", "8% value", "8% duty etc." As the amounts recovered from the buyers are not retained by the assessees, the question of deposit cannot arise, whether under Section 11D or any other provision. A reading of Section 11D makes it clear that what is required is that amounts collected as duty should not be retained by the manufacturers and should be deposited with the revenue. This was the view that Division Bench took in the case of Nu-Wave Shoes. ..." 12. The appellant also refers to the previous circular of November 12, 2001 pertaining to Rule 57CC of the Central Excise Rules, 194....
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....he CENVAT credit by an equivalent amount, tantamounts to such amount having made over to the excise authorities or refunded to the excise authorities or the like. 16. It is evident that the adjudicating authority did not refer to the first Explanation to Rule 6(3) of the said Rules of 2004 while passing the relevant order. In such circumstances, the adjudicating authority committed an error of jurisdiction in failing to appreciate the extent to which the dictum in Unison Metals Limited bound the adjudicating authority. The discussion in paragraph 8 of the judgment pertaining to the then duty of 8 per cent. is the same discussion that is relevant in the context of the first Explanation to Rule 6(3) of the 2004 Rules that ought to have guided the adjudicating authority while passing the order of adjudication. In failing to see the ratio in the judgment in Unison Metals Limited in the context of a provision that the adjudicating authority failed to notice, there is a jurisdictional error on the part of such authority. 17. Since such jurisdictional error was amenable to correction within the scope of judicial review exercised in the extraordinary jurisdiction under Article 226 of t....