TaxTMI 
TaxTMI 
2026 (7) TMI 1846
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....ion No. 12/2012-CE without payment of Excise duty. Since common inputs were used in the manufacture of dutiable as well as exempted products and separate accounts were not maintained, the appellant opted to comply with Rule 6 (3)(a)(i) of the Cenvat Credit Rules, 2004 by reversing an amount equivalent to 6% of the value of exempted goods. The said amount was duly reversed in their books of accounts and reflected in the ER1 Returns. 3. The appellant had entered into an agreement with M/s Megha Engineering & Infrastructure Ltd., Whereby, the buyer agreed to reimburse the appellant the amount payable under Rule 6(3) of Cenvat Credit Rules, 2004. Accordingly, the appellant recovered the equivalent amount from the buyer. Since the invoice format contends only the column "Excise duty", the reimbursement amount was reflected under that column although the goods themselves were exempt from duty. 4. During audit, the Department noticed that the amount had been shown in the invoices as "Excise duty". According to the Department, once any amount is collected as Excise duty, Section 11D mandates its deposit into the Government treasury. Consequently, the present proceedings were initiate....
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.... meaning of Section 11D. 12. There is no dispute that the goods supplies by the appellant were fully exempt under the relevant exemption notifications. Consequently, no Excise duty was leviable on such clearances. 13. It is equally undisputed that the appellant discharged its independent statutory obligation under Rule 6(3)(a)(i) by reversing an amount equal 6% of the value of exempted goods and reflected such reversal in its statutory records and ER-1 Returns. 14. The agreement entered into between the appellant and M/s Megha Engineering and Infrastructure Ltd., specifically provided that the buyer would reimburse this statutory amount. Thus, the contractual intention between the parties is unambiguous. The buyer agreed only to reimburse the Rule 6(3) liability and not to pay Excise duty. 15. The Revenue has proceeded solely on the basis that the invoice described the amount under the column "Excise duty" in our considered opinion, the description employed in an invoice cannot determine the true legal character of a transaction where the surrounding documents and contractual arrangement clearly establish otherwise. 16. The New Delhi Tribunal in Jindal Tubular (India....
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....dated 16-5-2008. Therefore, this part of the demand cannot be sustained and needs to be set aside." 17. The Larger Bench decision in Unison Metals Ltd., supra, also lays down that Section 11D applies only where the assessee has collected an amount as Excise duty. Where the amount represents something other than duty, Section 11D has no application. The said Larger Bench decision has also been accepted by the Central Board through Circular dated 16.05.2008. Relevant paras of the decision as follows: "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 a....
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....erstanding or apprehension. There are no words in the section which provide for payment of duty twice over. All that the section says is this : the amount collected by a person/manufacturer from the buyer of goods as representing duty of excise shall be paid over to the State even if the tax collected by the manufacturer from his purchaser is more than the duty due according to law, the whole amount collected as duty has to be paid over to the State; if on the assessment being made it is found that the duty collected and paid over by the manufacturer is more than the duty due according to law, such surplus amount shall either be credited to the Fund or be paid over to the person who has borne the incidence of such amount in accordance with the provisions of Section 11B. It is obvious that if in a given case, the manufacturer has collected less amount as representing the duty of excise than what is due according to law he is not relieved of the obligation 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 attra....