Custom, Excise & Service Tax Tribunal
M/S. Katralla Products Pvt. Ltd vs Cce, Coimbatore on 28 January, 2008
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No. E/460/2003
(Arising out of Order-in-Appeal No.104/2003-CE dated 11.4.2003 passed by the Commissioner of Central Excise (Appeals), Coimbatore)
For approval and signature:
Honble Mr. P. G. Chacko, Member (Judicial)
Honble Mr. P. Karthikeyan, Member (Technical)
1. Whether Press Reporters may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
M/s. Katralla Products Pvt. Ltd. Appellants
Vs.
CCE, Coimbatore Respondent
Appearance Shri Abraham Markos, Advocate for the Appellants Shri N.J. Kumaresh, SDR, for the Respondent CORAM Honble Mr. P. G. Chacko, Member (J) Honble Mr. P. Karthikeyan, Member (T) Date of Hearing: 28.01.2008 Date of Pronouncement:
Final Order No. ____________ Per P. G. CHACKO This appeal filed by the assessee is against a demand of Rs.1,68,322/- under Section 11D r/w Section 11A of the Central Excise Act for the period 1.4.1995 to 6.10.1995 and also against a penalty of Rs.10,000/- imposed under Rule 173Q of the Central Excise Rules, 1944. The appellants were engaged in the manufacture of soda-makers [SH 8422.90 of the Schedule to the Central Excise Tariff Act] and were availing SSI exemption in terms of Notification No. 1/93-CE dated 28.2.1993 during 1995-96. About 70% of their production at Coimbatore Unit were transferred to their Head Office at Ernakulam and sold to various dealers and distributors. From the scrutiny of invoices raised by the head office, it appeared to the department that the appellants had collected 10% of price as Central Excise duty from their customers even while availing SSI exemption during the period 1.4.1995 to 6.10.1995. In a statement given on 9.2.1996 under Section 14 of the Central Excise Act, the Executive Director of the company admitted inter alia that the above amount had been collected as excise duty from the customers by mistake. He also stated that they had no intention to collect any extra amount as duty from their customers. They were preparing computerized invoices in their head office. It was on account of omission to make necessary correction in the computer programme that they continued to collect 10% duty [as prevalent on 31.3.1995] from 1.4.1995. He added that any realization from the customers remained the same due to uniform price having been adopted for the soda-makers irrespective of the rate of duty. The Executive Director also surrendered the relevant invoices to the department and also furnished a reconciliation statement in respect of the invoices issued by the factory [Coimbatore] and those issued by the head office [Ernakulam]. As the appellants were found not to have paid to the Government the amount collected as duty from their customers during the above period and also not to have submitted their head offices invoices to the department during such period, the Commissioner issued a show-cause notice dated 6.2.1997 seeking to recover the aforesaid amount under Section 11D r/w Section 11A and proposing penalty under Rule 173Q. Apparently, the notice invoked the extended period of limitation under Section 11A for recovering the amount by alleging that the party had willfully suppressed the factum of having collected duty from their customers. The demand was contested mainly on the ground that the provisions of Section 11D were not applicable to the case inasmuch as any duty of excise had not actually been collected from the customers. The party also contended that, as there was no wilful suppression of facts by them and no intention to evade any duty, it was not open to the department to invoke the proviso under Section 11A. In adjudication of the dispute, the Addl. Commissioner confirmed the demand under Section 11D r/w Section 11A and imposed a penalty of Rs.10,000/-. In appeal, the Commissioner (Appeals) sustained the decision of the lower authority. Hence the present appeal of the assessee.
2. Reiterating the grounds of the appeal, learned counsel submitted that the appellants in fact had not collected any duty from their customers during the period of dispute as was indicated by the fact that the price of soda-makers collected from the customers remained the same in respect of clearances made after the said period also. It was submitted that it was on account of a bona fide mistake that an amount of excise duty was shown on the invoices issued during the said period. We are unable to accept this plea of the appellants inasmuch as, admittedly, the invoices issued from their head office indicated duty of excise having been collected from their buyers and no documentary evidence to the contra has been adduced. Where an invoice being a statutory document separately shows an amount of duty having been collected ad valorem, it must be presumed that such amount of duty has been collected from the buyer in respect of the goods sold to him under cover of the invoice. The burden is on the assessee (seller) to rebut this presumption by adducing documentary evidence showing that the amount of duty shown on the invoice has not actually been collected from the buyer. This evidence is missing in this case. Further, we observe that the only reason stated by the appellants in support of their claim that they did not actually collect any duty from their buyers during the period of dispute is that the price of the soda-makers remained the same even after the said period. This reasoning is no longer valid inasmuch as it is settled law that, merely on account of price having remained the same, it cannot be held that the incidence of duty was not passed on to the buyer. Thus the evidence on record is against the appellants vis-`-vis the demand under Section 11D of the Central Excise Act.
3. Turning to the plea of limitation raised by the appellants, we find that there was no limitation provision under Section 11D and there was even no mechanism provided under Section 11D for recovery of any duty of excise collected by a person from his customer and not remitted to the Exchequer. The Finance Act, 2000 amended the Section providing for recovery mechanism with retrospective effect from the 20th day of September 1991. In the case of Eternit Everest Ltd. Vs. Union of India 1997 (89) ELT 29 (Mad.) cited by learned counsel, the Honble Madras High Court had held, prior to the above amendment of Section 11D, that the provision was not enforceable in the absence of statutory-machinery for recovery. The Honble High Court also ruled out the applicability of the machinery provisions of Section 11A to situations falling under Section 11D. In this connection, the Honble Court observed thus:-
The nature of liability and charge or claim dealt with under Section 11A on the one hand and Section11D on the other being distinct and different in character and etymologically too there is no scope for clubbing the same together so as to treat them on par or as one and the same de hors their heterogenity even for purposes of computation and adjudication of the claims in the absence of a specific provision enabling the respondents to do so. In view of the above ruling of the Honble High Court, the contention of the Revenue that the assessee had wilfully suppressed material facts and therefore the duty collected by them from their buyers for the period of dispute could be recovered by invoking the larger period of limitation provided under Section 11A of the Central Excise Act cannot be accepted. At the same time, the argument of learned counsel that, in view of the Honble Supreme Courts decision in J.K. Spinning and Weaving Mills Ltd. And Another Vs. Union of India and Others 1987 (32) ELT 234 (SC) [wherein the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act was held to be inapplicable to assessees who were hit by the retrospective amendments made to Rules 9 and 49 of the Central Excise Rules, 1944], the larger period of limitation under Section 11A would not be available to the Revenue in this case for recovery under Section 11D is also unsustainable. The provisions for determination of the amount due to the Revenue from a person under Section 11D and for recovery of the same from such person were introduced in the year 2000 with effect from 20.9.1991, but even these provisions did not provide for any period of limitation for recovery as noted by this Tribunal in Ashoka SSK Ltd. Vs. Commissioner of Central Excise, Aurangabad 2003 (159) ELT 1069 (Tri. Mumbai) and Vimal Moulders (I) Ltd. Vs. Commissioner of Central Excise, New Delhi 2004 (164) ELT 302 (Tri. Del.). Presumably, it was the intention of the legislature that any amount collected as duty of excise by any person from his buyer but not credited to the Exchequer could be recovered without the bar of limitation.
4. In the result the demand of Rs.1,68,322/- is held to be enforceable. We have not found valid challenge against the penalty either. The penalty of Rs.10,000/- appears to be reasonable. Accordingly, the appeal is dismissed.
(Pronounced in open court on ___________)
(P. KARTHIKEYAN) (P.G. CHACKO)
Member (T) Member (J)
Rex
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