Custom, Excise & Service Tax Tribunal
M/S. The Indian Hume Pipe Co. Ltd vs Commissioner Of Central Excise, ... on 6 September, 2017
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal Nos. E/34 to 37/2009
(Arising out of Orders-in-Original No. 10/COMMR/CE/2008 dated 21.10.2008 passed by the Commissioner of Customs, Tirunelveli)
1. M/s. The Indian Hume Pipe Co. Ltd.
2. V. Karunakaran
3. C. Sridharan
4. S. Rajendran Appellants
Vs.
Commissioner of Central Excise, Tirunelveli Respondent
Appearance Shri Raghavan Ramabhadran, Advocate for the Appellants Shri K. Veerabhadra Reddy, JC (AR) and Shri B. Balamurugan, AC (AR) for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Date of Hearing / Decision: 06.09.2017 Final Order Nos. 41985-41988 / 2017 Per B. Ravichandran These four appeals are against common impugned order dated 21.10.2008 of Commissioner of Central Excise, Tirunelveli.
2. The appellants are engaged in the manufacture of PSC pipes liable to central excise duty. They have entered into agreement with certain contractors to execute work for TWAD Board and others with reference to clear water supply scheme projects. They claimed exemption under Notification No.6/2002 dated 1.3.2002 for such clearance. The Revenue entertained a view that the appellants are not liable for such exemption and proceeded against them. Another issue involved in the present appeals is that the appellants have collected certain amount towards excise duty and did not discharge the same in the Government account in time. Accordingly, in terms of section 11D of the Central Excise Act, 1944, proceedings were initiated against them to recover the said amount. The case was adjudicated resulting in the impugned order. The Commissioner of Central Excise confirmed the duty demand of Rs.75,61,020/- due to denial of exemption under Notification No.6/2002-CE and Rs.62,28,295/- under the provisions of Section 11D of the said Act.
3. The ld. Counsel appearing for the appellant submitted that the supplies under Notification No.6/2002 are made under the authority of respective District Collectors who are competent officers to issue the procurement certificate. They have clearly endorsed in the said certificate that these pipes are intended for projects covered under such notification. As such Revenue is not correct in denying the exemption.
4. Regarding demand under section 11D, the ld. Counsel submitted that as per contractual terms, the consideration of supply of pipes is inclusive of excise duty. Since the contracts are running and the clearance happened with or without duty depending upon the period and certificates under Notification No.6/2002, the Revenue entertained a view that all inclusive consideration will indicate that the appellants have collected certain amount representing excise duty and as such should have paid the said amount to the Government. The ld. counsel contesting such finding submitted that Section 11D will apply only when they have collected any amount representing central excise duty in any manner. Their invoice did not indicate any excise duty at all. The contracts are in general terms as per standard practice which will show inclusive of excise duty. In the absence of any representation by the appellant to the buyer that there is no excise duty being collected for the said sales, no amount can be recovered from them under section 11D. The ld. Counsel relied upon various case laws in support of his both contentions.
5. The ld. AR opposes the appeals. He submitted that there is no water treatment plant in many of the projects for which the PSC pipes were supplied by the appellant. The requirement for exemption is that the pipes should be used from source to plant and plant to the storage. In the absence of plant for treatment to make the water fit for human consumption, the exemption is not available to the impugned goods.
6. Regarding the demand under section 11AD, he submitted that in their accounts book certain entries are figuring in the journal to the effect that claim refundable amount and excise duty exemption amount as per Finance Act kept in the account. This will indicate that the appellant are actually realizing certain amount attributable to excise duty and the provisions of Section 11D are attracted.
7. We have heard both sides and perused the appeal records.
8. On the first issue regarding the liability of the appellant under Notification No. 6/2002-CE, we note that all supplies of pipes are made in terms of the certificate issued by the jurisdictional District Collectors. The certificates categorically mentioned the requirement of pipes for the projects referring to the above mentioned Notification. However, the Revenue held a view that wherever there is no treatment plant the whole exemption will not apply. Here we note that this is against the certificate issued by the District Collector. Generally, when an exemption notification is to be extended based on a certificate by third party Government authority, such certificates unless repudiated are to be accepted for extending the benefit. Such view has been taken by the Tribunal in various cases. A reference can be made to the recent decisions in the cases of P&C Constructions P. Ltd. Vs. Commissioner of Central Excise Final Order No. 41721/2017 dated 11.8.2017. The similar decisions can be referred to in Jain Irrigation Systems Ltd. Vs. Commissioner of Central Excise 2017-TIOL-918-CESTAT-MUM; M/s. Laxmi Pipes and Fittings Pvt. Ltd. Vs. Commissioner of Central Excise 2017-TIOL-2160-CESTAT-DEL and in the appellants own case vide Final Order No. 42123/2016 dated 1.11.2016. In view of the consistent finding of the Tribunal, on similar set of facts, we find denial of exemption is not tenable. Here we also note that the ld. counsel submitted that the treatment plant does not mean an elaborate establishment of machinery. There can be a situation where the water can be made fit for distribution for human consumption, by a simple process including at the place of source. It is his case that the plant cannot be so strictly interpreted to refer to only an elaborate process of treatment.
9. Regarding the demand under section 11D of the Act, we note that the said section stipulates that any person who has collected any amount in excess of duty assessed shall forthwith pay the amount so collected to the credit of the Central Government. Sub-section (1A) is added with effect from 10.5.2008 and the same is not applicable to the period in dispute in the present appeals. Sub-section (1) only talks about collecting any amount in excess of excise duty, representing as excise duty. Apparently, in the present case, the invoice raised by the appellant did not represent any excise duty. However, Revenue proceeded against them only on the inference that the contract being inclusive of duty payable it will necessarily lead to a conclusion that the excise duty element is inbuilt and the appellant did collect the same. Support was taken from the ledger entry as indicated above. We note that the appellant accepted the said ledger entry which was also recorded in the show cause notice that they have reversed such entry recorded on due advice from the auditors. We note that even otherwise to apply the provisions of section 11D(1), it is to be clearly established that the appellant did collect any amount, in excess of excise duty payable, as if representing excise duty to invoke such provision. In the present case, no such evidence is available to attract the provisions of Section 11D(1). We also refer to the decisions of the Tribunal in the case of Poddar Industrial Corporation Vs. Commissioner of Central Excise 2003 (158) ELT 473 (Tri. Kol.); Commissioner of Central Excise Vs. Tapi RCC 2005 (186) ELT 107 (Tri. Mumbai); Shreyans Industries Ltd. Vs. Commissioner of Central Excise 2005 (179) ELT 351 (Tri. Del.) and Ascent Laboratories Ltd. Vs. Commissioner of Central Excise, Mumbai 2008 (221) ELT 583. In various decisions, Tribunal held that if there is a composite contract for consideration which show excise duty is inclusive, a demand under section 11D cannot be raised.
10. In the present case, there is no evidence that the sales document namely invoices etc. indicated any excise duty separately so that the buyer has paid any money representing excise duty to the appellant. In the absence of such situation, the provisions of Section 11D cannot be attracted and the impugned order is without merit.
11. We note that the three appeals in addition to the main appeal are regarding penalties imposed on individuals. Since the main appeal is allowed, there is no question of penalty on other appellants.
12. In view of the above discussion and analysis, we find no merit in the impugned order and accordingly the same is set aside and the appeals are allowed with consequential relief if any.
(Order dictated in open court)
(B. Ravichandran) (Sulekha Beevi C.S.)
Member (Technical) Member (Judicial)
Rex
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