Custom, Excise & Service Tax Tribunal
Cce, Chandigarh vs M/S. Horological Components (P) Ltd on 10 July, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST BLOCK NO. 2, R.K. PURAM, NEW DELHI COURT III EXCISE APPEAL NO. 2587 OF 2007-SM [Arising out of Order-in-Appeal No. 213/CE/CHD/2007 dated 26.06.2007 passed by the Commissioner (Appeals), Central Excise, Chandigarh] For approval and signature: Honble Mr. P.K. Das, Member (Judicial) 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 would 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? CCE, Chandigarh Appellant Vs. M/s. Horological Components (P) Ltd., Respondents
Appearance:
Shri S. Gautam, DR for the Revenue;
Shri Vikrant Kakaria, Advocate for the respondents Coram:
Honble Mr. P.K. Das, Member (Judicial), Date of hearing/decision: 10th July, 2009 FINAL ORDER NO._________________ dated __________ Per P.K. Das:
Revenue filed this appeal against Order-in-Appeal No. 213/CE/CHD/2007 dated 26.6.2007 passed by the Commissioner (Appeals), Chandigarh.
2. After hearing both sides and on perusal of the records, it is seen that the respondents are engaged in the manufacture of Watch components, Meter parts, and parts of Watch straps. The appellants used duty paid inputs in the manufacture of dutiable and exempted finished goods. They paid an amount equivalent to 8% of total price of exempted goods at the time of clearance from the factory. Original authority confirmed the demand of Rs. 3,79,970/- under the proviso to Section 11D of the Central Excise Act, 1944 along with interest. Commissioner (Appeals) set aside the adjudication order. Hence, Revenue filed this appeal.
3. The main contention of the learned D.R. is that the appellants recovered the entire amount of Rs. 3,79,970/- so paid/reversed in Cenvat account as duty of excise in terms of Rule 6 of Cenvat Credit Rules. He also submits that the payment made by the respondents are in compensatory nature which could not be collected from the buyer. He relied upon the decision of the Tribunal in the case of CCE, Kanpur vs. Rania Kutir Udyog Samiti, reporte d2007 (209) ELT 141 (Tri.-Del.). On the other hand, learned Advocate on behalf of the respondents submits that the Commissioner (Appeals) passed the order following the decision of the Larger Bench decision in the case of Unison Metals Ltd. vs. CCE, Ahmedabad, reported in 2006 (204) ELT 323 (Tri.-Del). He also submits that the Div. Bench of the Tribunal in the case of Ganga Engineers vs. CCE, Kanpur, reported in 2008 (232) ELT 328 (Tri.-Del.) following the decision of the Larger Bench and Boards Circular No. 870/08/2008-CX dated 16th May, 2008 held that provision of Section 11D of the Act is not applicable even if the amount recovered from the buyers account so collected being price and not Central Excise duty.
4. After hearing both sides and on perusal of the records, I find force in the submissions of the learned Advocate. It is seen that the Div. Bench of the Tribunal in the case of Ganga Engineers (supra) after relying upon the decision of the Larger Bench of the Tribunal and Boards Circular held as under:-
7.We have carefully considered the submissions. It is not in dispute that demand relates to exempted products. No excise duty is payable on them. What are required to be complied with are provisions relating to Rule 57CC. The relevant portion of decision of Larger Bench in Unison Metals Ltd. (supra) is as follows :-
The scheme of Central Excise duty payment is that a 9. 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 11 D 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.
The real identity of the amount collected (whether excise 10. duty payable or not) is of no relevance for Section 11D. What is relevant is only whether the collection was represented as duty of excise. The representation may as well be entirely false. The qualifying of the representation through the words in any manner makes this clear. Therefore, the contentions of both sides on the question, as to whether deposits under Rule 57CC are excise duty or not, are beside the point.
8.The relevant portion of clarification of the Board on this issue is as follows:
In the light of what is stated above, it is clarified that 4. as long as the amount of 8% or 10% is paid to the Government in terms of erstwhile Rule 57CC of the Central Excise Rules, 1944 or Rule 6 of the Cenvat Credit Rules, the provisions of Section 11D shall not apply even if the amount is recovered from the buyers. However, it may be noted that the Cenvat credit of the said amount of 8% or 10% cannot be taken by the buyer since such payment is not a payment of duty in terms of Rule 3(1) of the Cenvat Credit Rules, 2004. Therefore, the said 10% amount should be shown in the invoice as 10% amount paid under Rule 6 of the Cenvat Credit Rules, 2004.
9.In the light of the above, we are in agreement with the views expressed by the learned Advocate for the assessee. Accordingly, we allow the appeal by the assessee with consequential relief and reject the appeal by the Department.
5. In view of the above decision of the Tribunal I do not find any reason to interfere with the order of the Commissioner (Appeals). Accordingly, appeal filed by the Revenue is rejected.
(Dictated & pronounced in the Open Court.) (P.K. DAS) MEMBER (JUDICIAL) RK