Custom, Excise & Service Tax Tribunal
M/S. Texmaco Ltd vs Commr. Of Central Excise, Kolkata-Iii on 13 May, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EAST REGIONAL BENCH : KOLKATA
Excise Appeal No. : 465/2007
(Arising out of the Order-in-Original No. 3/COMMR/CE/Kol-III/2007-08 dated-22/05/2007 passed by the Commissioner of Central Excise, Kolkata-III)
For approval and signature of:
SHRI H.K. THAKUR, HONBLE TECHNICAL MEMBER
SHRI P.K. CHOUDHARY , HONBLE JUDICIAL MEMBER
======================================================
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 Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
Authorities ?
M/s. TEXMACO LTD.
APPELLANT(S)
VERSUS
Commr. of Central Excise, Kolkata-III
RESPONDENT(S)
APPEARANCE
Sri J.P. Khaitan, Sr. Advocate,
Sri C.M. Ghorawal, Advocate &
Sri Saurav Bagaria, Advocate
FOR APPELLANT(S)
Sri S. Mukhopadhyay, Supdt. (A.R.
FOR THE RESPONDENT(S)
CORAM:
SHRI H.K. THAKUR, HONBLE TECHNICAL MEMBER
SHRI P.K. CHOUDHARY , HONBLE JUDICIAL MEMBER
DATE OF HEARING/DECISION : 13/05/2016
ORDER NO. : FO/A/75411/2016
PER SHRI H.K. THAKUR
This Appeal has been filed by the appellant against Order-in-Original No.3/COMMR/CE/Kol-III/2007-08 dated-22/05/2007 under which a demand of Rs.3,10,14,076/-(Central Excise Duty) and Rs.2,97,964/- (Education cess) has been confirmed by the adjudicating authority under Section 11D and 11DD of the Central Excise Act, 1944.
2. Shri J.P. Khaitan (Senior Advocate) , Shri Ghorawal ( Advocate) and Shri Sourav Bagaria (Advocate ) appeared on behalf of the appellant. Shri J.P. Khaitan submitted that appellant is manufacturing Railway wagons & railway wagon parts for the Indian Railways which are exempted from payment of duty under Sl. No. 207 and 238 of exemption notification No. 6/2002-CE dated 1/3/2002 as amended. The appellant is getting couplers and bogies manufactured from its sister unit at Belgharia. That appellants sister concern availed CENVAT Credit but since couplers/bogies are exempted amounts under Rule 6 (3) (b) of the CENVAT Credit Rules/Rule 57CC of the Central Excise Rules, were paid by the appellant.That such reversal of amounts under Rule 6 (3) (b) are specifically shown on the invoices raised by the appellant to the Railways as per the contract. That the amounts so paid are reimbursed by the Railways to the appellant which department is demanding under Section 11D/11 DD from the appellant. It is the case of the appellant that as per communication dated 7/12/2006 from the Director, Railway Stores (Wagons), Railway Board, written to Director, Railway Stores (Iron & Steel), Kolkata; a composite unit who manufacture bogies and couplers in house for their own production of wagons against Railway orders are given reimbursement @ 8%/10% amounts paid under Rule 6 (3) (b) of the CENVAT Credit Rules. That non-composite units manufacturing bogies /couplers for railway on payment of Central Excise duty are given re-imbursement @ 16% of excise duty paid. That with respect to non-composite units the question of payment under Section 11D of the Central Excise Act, 1944, was settled by this Bench in the case of Bridge and Roof Co. (India) Ltd. Vs. CCE, Kolkata-II reported in 2008 (225) ELT 531 (Tri.-Kolkata), under which it was held that reimbursement of the excise duty paid on bogies/couplers, supplied to Indian Railways, cannot be confirmed under Section 11D of the Central Excise Act.
2.1 Ld. Sr. Advocate relied upon the Larger Bench decision in the case of Unison Metals Ltd. Vs. CCE, Ahmedabad I reported in 2006 (204) ELT 323 ( Tri-LB). He made the Bench go through para 8 and 9 of this case law to argue that amounts paid under Rule 57 CC of the Central Excise Rules, 1944, cannot be recovered as per the provisions of Section 11D of the Central Excise Act, 1944. It was his case that provisions of Rule 57CC of Central Excise Rules are identical to the provisions contained in Rule 6 (3) (b) of the CENVAT Credit Rules. Ld. Advocate also made the Bench go through para 2 of CBEC Circular No. 870/8/2008-CX dated 16/5/2008 to argue that Larger Bench decision in the case of Unison Metal Ltd. Vs. CCE, Ahmedabad-I has been accepted by the Department.
3. Shri S. Mukhopadhyay, Supdt. (A.R.) appearing on behalf of the Revenue reiterated the stand taken by the Adjudicating authority.It was also submitted that CBEC Circular dated 16/5/2008 was not available before the adjudicating authority when Order-in-Original dated 22/05/2007 was passed.
4. Heard both sides and perused the case records. The issue involved in the present appeal is whether amounts paid under Rule 6 (3) (b) of the CENVAT Credit Rules, 2004 can be demanded under Section 11D of the Central Excise Act, 1944 when such amounts paid by the appellant are reimbursed by the Indian Railways Board. It is observed from the case records that the same issue has been decided by Larger Bench of CESTAT in the case of Unison Metals Ltd. Vs. CCE, Ahmedabad-I (supra), has made following observations in para 8 & 9 of this case law which is reproduced below:
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. 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 basis on inputs used in the manufacture of exempted variety of footwear and that the amount so reversed has been charged from the customers. A perusal of the invoices that the appellants have not retained the amount collected from the customers and that they have passed on the amount to the Government as provided under Section 11D of the Central Excise Act. Hence the charge of contravention of the provisions of Section 11D is not sustainable. Accordingly, we set aside the impugned order and allow the appeal. We find that the above view taken by the Tribunal is in conformity with the judgment of the apex Court in the case of Mafatlal Industries, that repeat payment of excise duty is not contemplated. We read para 97 of that judgment [Mafatlal Industries Ltd. - 1997 (89) E.L.T. 247 (S.C.)]:
Meaning and Purport of Section 11D
97. It was contended by the learned counsel for the appellants-petitioners that Section 11D provides for double taxation. It was contended that sub-section (1) of Section 11D makes the manufacture liable to pay duty which he collects from the buyer as part of the price of goods even where the manufacturer has already paid the duty at the time of removal. We do not think that there is any foundation for the said understanding 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 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 is that manufacturers shall not collect amounts falsely representing them as central excise duty and retain them, thus, unjustly, benefiting themselves. In the present cases, (irrespective of whether the 8% payments were duty or not) since the 8% amount remain already paid to the revenue, and no amount is retained by the assessee, Section 11D has no application. It is also observed that the above order passed by the Larger Bench has been accepted by the Department as per CBEC Circular No. 870/8/2008-CX dated 16/05/2008.
5. In view of the above settled proposition of law confirmation under Section 11D of the Central Excise Act, 1944 with respect to amounts reimbursed to the appellant, equivalent to the payments made under Rule 6 (3) (b) of the CENVAT Credit Rules, is not justified. Accordingly, appeal filed by the appellant is allowed.
(Operative part of the order already pronounced in the Court)
Sd/- 17/5/16 Sd/- 17/5/16
(P.K.CHOUDHARY) (H.K. THAKUR) Judicial Member Technical Member
k.b/-
Excise Appeal No. : 465/2007
2