Custom, Excise & Service Tax Tribunal
M/S. Carborundum Universal Ltd vs Cce, Chennai-I on 7 March, 2008
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/1451/2004
(Arising out of Order-in-Appeal 132/04 (M-I) dated 13.10.2004, passed by the Commissioner of Central Excise (Appeals), Chennai)
For approval and signature
Honble P.KARTHIKEYAN,Member (Technical).
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M/s. Carborundum Universal Ltd. : Appellant
Vs.
CCE, Chennai-I : Respondent
Appearance Shri M. Kannan, Adv. for the appellant Shri J.P. Gregory, JCDR for the respondent CORAM Shri P. KARTHIKEYAN, Member (Technical) Date of hearing : 07.03.08 Date of decision : 07.03.08 Final ORDER No.________/2008 The original authority demanded an amount of Rs. 86,009/- under Section 11D of the Central Excise Act, 1944 (the Act) from M/s. Carborundum Universal Ltd. (CUL). Appropriate interest was demanded under Section 11 DD of the Act and penalty equal to the amount demanded (CER) was imposed on the appellants under Rule 25 of Central Excise Rules, 2002. In the impugned order the Commissioner (Appeals) upheld the order of the original authority.
2. The facts of the case are that during the period 01.04.01 to 31.07.04, CUL had cleared their final products Grinding Wheels, Coated abrasives and Metal working fluids on payment of duty from the factory. In accordance with the marketing pattern followed by the appellants, goods were sold through eight depots located at various parts of the country. Owing to an error in the computer system, wrong figures were mentioned as excise duty in the depot invoices. However, according to the first appellate authority, the appellant did not collect excess duty other than what was paid. The Commissioner (Appeals) held that the department had limitations of jurisdiction to recover the excess duty collected by the dealers. The excess collection of duty by dealers was owing to the incorrect figures displayed in the invoices generated by the assessee for sale of goods from the depots. He held that there was contravention of Section 11D and affirmed the order of the original authority as correct.
3. Heard the Ld. Counsel for the appellants and Ld. JCDR for the department. The ld Counsel showed specimen invoices which showed the correct working and total duty payable as well as an incorrect figure as ED payable equal to Sales Tax @ 10% on cum-duty value.
4. The impugned order concludes as follows:
I have examined the case records and submissions. I find that the Appellant vide their letter dated 9th December, 2003 addressed to the Assistant Commissioner of Central Excise has stated as follows:
Our Dealer M/s. Pals Enterprises should have passed on the duty amount of Rs. 2160.00 in his invoice instead of Rs. 2505.60 as shown in his invoice No. 155 dated 18.06.2001. In this instant case, it is evident that our Dealer M/s. Pals Enterprises have collected an excess amount of Rs. 345.60 from M/s. Southern Auto Castings Pvt. Ltd., and he is under moral and legal obligation to deposit the said portion of the duty to the credit of the Central Government and not by us.
All these mistakes occurred only because of our ERP system error. At last we found the mistake and rectified the same in the subsequent periods. Therefore this was not repeated in the subsequent period. It is evident that based on the defective invoices issued by the Appellant their dealers have collected excess duty amounts. The argument of the Appellant that the Department should recover the excess duty from the Dealer and not from the Appellant appears patently illogical and unreasonable. The Department is constrained by jurisdictional and limitation problems whereas the entire problem has occurred on account of the defect in the invoices issued by the Appellant. It is also evident that excess duty has been collected. Hence, there is a clear contravention of Section 11D. The impugned order is correct in law and is upheld.
5. The finding is to the effect that only the dealers collected the excess amount and not the appellant. In this factual situation, it is patently erroneous to fasten a liability on the appellants in terms of Section 11D whereas they were not found to have collected any amount representing the same as duty in excess of the actual duty paid. In the circumstances, the impugned order is not sustainable. The appeal is allowed.
(Dictated and pronounced in open Court) (P. KARTHIKEYAN) MEMBER (T) BB 2