prpri Section 11D cannot be invoked if excise duty collected been paid to Govt Section 11D cannot be invoked if excise duty collected been paid to Govt

Case Law Details

Case Name : CCE Vs. PRP Wire Ropes (CESTAT Mumbai)
Appeal Number : Appeal No. E/3700/05/MUM
Date of Judgement/Order : 08/02/2017
Related Assessment Year :

The appellant (sic) is engaged in the manufacture of thinner wire from thicker wire by the process of drawing wire rods. They are availing CENVAT Credit on the input and paying excise duty on the final products i.e. drawn wire. The department’s case is that since at the relevant time, the drawing of wire did not amount to manufacture, the appellant’s activity is not excisable activity. Therefore, they were not supposed to charge the excise duty. Since they charged the excise duty and collected the same from their customers, the same is liable to be recovered under section 11D of the Central Excise Act, 1944. The adjudicating authority confirmed the demand of duty under section 11D. The appellant being aggrieved by the Order-in-Original filed an appeal before the Commissioner (Appeals), who set aside the impugned order and allowed the appeal. Therefore, the Revenue is before us.

2. Shri S.V. Nair, learned AC (AR) appearing on behalf of the Revenue reiterating the grounds of appeal, submits that since wire drawing activity was not amount to manufacture at the relevant time is not in dispute, they were not supposed to pay the duty and collect the same from the customers. Therefore, the amount collected by the appellant was not payable duty, hence the same is required to be credited in the Government’s account in terms of section 11D of Central Excise Act, 1944.

3. None appeared on behalf of the respondent.

4. We have carefully considered the facts of the case and perused the records. The demand was confirmed under section 11D, which reads as under:-

Section 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 there under, every person who is liable to pay duty under this Act or the rules made there under, and has collected any amount in excess of duty assessed or determined and paid on any excisable goods under this Act or the rules made there under 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.

(2) Where any amount is required to be paid to the credit of the Central Government under sub-section (1) and which has not been so paid, the Central Excise Officer may serve on the person liable to pay such amount, a notice requiring him to show cause why the said amount, as specified in the notice, should not be paid by him to the credit of the Central Government.

(3) The Central Excise Officer shall, after considering the representation, if any, made by the person on whom the notice is served under sub-section (2), determine the amount due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined.

(4) The amount paid to the credit of the Central Government under   [sub-section (1) or sub-section (3), as the case may be, shall be adjusted against the duty of excise payable by the person on finalisation of assessment or any other proceeding for determination of the duty of excise relating to the excisable goods referred to in   sub-section (1).

(5) Where any surplus is left after such adjustment under sub-section (4), the amount of such surplus shall either be credited to the Fund or, as the case may be, refunded to the person who has borne the incidence of such amount, in accordance with the provisions of section 11B and such person may make an application under that section in such cases within six months from the date of the public notice to be issued by the Assistant Commissioner of Central Excise for refund of such surplus amount.

From the plain reading of the above section 11D, the amount under section 11D can be recovered only in a case where the assessee collected any amount in excess of duty assessed or determined and paid on any excisable goods from the buyer of such goods, in any manner, as regards duty of excise. Therefore, even if any excise duty the assessee collected from the buyers of the goods and if the same has been paid to the Governments account, section 11D has no application. In the present case, the duty was assessed by the respondent and the same was paid to the Govt. account. Therefore, no amount remained to be paid to attract section 11D.

4.1 Learned Commissioner (Appeals) has given the detailed finding on the similar line, which is reproduced below:–

“Similarly it was not even alleged that they collected a amount as ‘duty’ but not paid it to the exchequer. None of situation specified in section 11D is applicable in the present case. In fact, in such a situation, there should not have any grievance to the parties since the appellants had paid the amount whatever they collected and paid it completely. The relevant show- cause notice did not point out that any amount collected by the appellants as duty was not paid to the Government account.”

From the above findings of the impugned order, which absolutely in accordance with section 11D, there is no substance in the Revenue’s appeal. We, therefore, uphold the impugned order and dismiss the appeal of the Revenue.

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