Customs, Excise and Gold Tribunal - Delhi
Vimal Moulders (I) Ltd. vs Commissioner Of Central Excise on 27 November, 2003
Equivalent citations: 2004(93)ECC653, 2004(164)ELT302(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in this Appeal filed by M/s. Vimal Moulders (I) Ltd. is whether the provisions of Section 11D of the Central Excise Act are attracted.
2. Shri Naveen Mullick, learned Advocate, submitted that the Appellants manufactured both dutiable goods and exempted goods; that they availed Modvat credit of the duty paid on the inputs; that since raw materials for both their products dyes and plastic moulded furniture is common; that they pay the amount equal to 8% of the price of the exempted goods at the time of their clearance in terms of provisions of Rule 57CC of the Central Excise Rules, 1944; that the said amount of 8% is being collected by them as cost of their product from their customers; that it is the case of the Department that their products being exempted, they have to deposit the duty collected by them at the rate of 8% with the Government as per the provisions of Section 11D of the Central Excise Act. The learned Advocate, further, submitted that the amount deposited by them under Rule 57CC is not duty and as such provisions of Section 11D of the Act are not attracted; that in any case, they have already paid the amount equal to 8% of the price of the exempted goods to the Government and same is collected by them from their customers, it cannot be claimed by the Revenue that they have collected any amount in excess of the duty paid by them. He relied upon the decision of the Tribunal in the case of Nuo Wave Shoes v. CCE, New Delhi [2001 (138) E.L.T. 331] wherein the Tribunal has held that when the assessee has paid the amount at the rate of 8% under Rule 57CC and they are charging 8% from their customers, the provisions of Section 11D are not attracted as the assessee had not retained the amount collected from their customers. Finally, the learned Advocate, submitted that the Appellants have been filing their regular monthly returns and the Superintendent has been calling their invoices issued under Rule 52A for their scrutiny and check and that this is evident from the Superintendent's letter dated 16-7-98 in which it has been mentioned that "on the scrutiny of invoices of exempted goods cleared by the Appellants, it had been observed that they had collected the duty amount at the rates of 8% ad valorem paid under Rule 57CC from the buyers of the exempted goods"; that accordingly the extended period of limitation cannot be invoked as there has been no suppression with an intent to evade payment of duty; that the show cause notice has been issued to them on 22-8-2001 for demanding the duty for the period from April, 1997 to June, 1999; that as such the entire period is beyond the normal period of time limit in terms of Section 11A of Customs Act. He also relied upon the decision in the case of Gem Cables and Constructions Ltd. v. CCE, Hyderabad [1994 (72) E.L.T. 848 (Madras)] wherein it has been held that Section 11D can be invoked only within a period that is permissible under Section 11A.
3. Countering the arguments Shri Kumar Santosh, learned SDR along with Shri P.M. Rao, learned Departmental Representative, submitted that the invoices issued by the Appellants clearly mentioned 8% as duty; that as undisputedly the toys are exempted from payment of duty, whatever amount has been collected by them from their customers, is an amount in excess of duty assessed or determined and accordingly they have to deposit the said amount with the Central Government in terms of provisions of Section 11D of the Central Excise Act. He emphasised that the payment of amount equal to 8% of the price at the time of removal of the exempted goods is towards the Modvat credit of the duty paid on the inputs which have been availed of by them though the inputs have been used in relation to manufacture of the exempted product; that this cannot be claimed by the appellants that they had already paid the amount of duty collected by them from their customers to the Department as the amount paid by them represented Modvat credit which was not available to them from the beginning. He finally submitted that the provisions of Section 11D of the Act has been amended with effect from the 20th day of September, 1991 by Section 103 of the Finance Act, 2000; that as per the amended Section, no time-limit has been specified for recovering the amount which has not been paid by the assessee; that as such the decision of the Madras High Court in the case of Gem Cables and Constructions will not be applicable as the provisions of Section 11D has since been amended.
4. We have considered the submissions of both the sides. It is not in dispute that the Appellants are availing Modvat credit on the entire quantity of inputs which are received by them in their factory and which are used in or in relation to manufacture of both dutiable and exempted products. Rule 57C of the Central Excise Rules, 1944 clearly mentions that no credit of the specified duty shall be allowed on such quantity of inputs which is used in the manufacture of final products which are exempted from the whole of duty of Excise leviable thereon or are chargeable to nil rate of duty. Rule 57C of the Rules further provide that the provisions of Sub-rule (1) of Rule 57 shall be deemed to be satisfied only when the provisions of Sub-rule (1) or Sub-rule (5) or Sub-rule (9) of Rule 57CC are complied with. Sub-rule (1) of Rule 57CC provides that the manufacturer shall pay an amount equal to 8% of the price of the exempted goods at the time of their clearance from the factory. The appellants have opted for the procedure prescribed under Sub-rule (1) of Rule 57CC as they pay an amount equal to 8% of the price of the exempted goods at the time of their clearance. This amount is in lieu of the Modvat credit which has been availed by them in respect of inputs which have gone in the manufacture of the exempted products. It is also not disputed by the Appellants that they had collected duty at the rate of 8% ad valorem from their customers while selling the exempted products. Thus this amount of duty collected from the customers is in excess of the duty leviable on the goods. Section 11D of the Central Excise Act as amended by Section 103 of the Finance Act, 2000, provides that every person who has collected any amount in excess of the duty assessed or determined and paid on any excisable goods, from the buyers shall pay the amount so collected to the credit of the Central Government. As the duty assessed is nil in view of the exemption, the entire amount collected by the Appellants is liable to be paid to the Central Government. With due respect, we differ from the view taken in the case of Nuo Wave Shoes as perhaps the Tribunal was not informed the correct nature of the amount paid by the manufacturer at the rate of 8% at the time of clearance of the exempted goods. We agree with the learned Senior Departmental Representative that the provisions of Section 11A(1) of the Central Excise Act are not invocable in view of the amended Sub-section (2) of Section 11D of the Central Excise Act, which provides as under :-
"(b) for Sub-section (2), the following sub-sections shall be substituted and shall be deemed to have been substituted, namely :-
(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."
5. It is apparent from Sub-section (2) of Section 11D which shall be deemed to have come into effect from 20th day of September, 1991, no time-limit is specified for demanding the duty and the machinery to recover the duty is provided in the Section itself. Accordingly the decision of the Hon'ble Madras High Court will not now be applicable. We, therefore, uphold the demand against the Appellants. However, taking into consideration the facts and circumstances of the case, we do not find it to be a fit case for imposing any penalty. Accordingly we set aside the entire penalty. The Appeal is disposed of in the above terms.