2008 (6) TMI 434 - AT - Central Excise

Summary

Issues involved: Appeal against direction to pay 8% of value of goods cleared and imposition of penalty.

Summary:
The case involved an appeal arising from the same order-in-appeal dated 3-6-05. The appellant, a manufacturer of dutiable and non-dutiable products, availed Cenvat credit for common inputs without maintaining separate accounts. They reversed 8% of the value of exempted goods cleared between 6-12-95 and 11-10-99 as per Rule 57CC(1) and collected this amount from customers. The dispute arose when the original authority considered the collected amount as excise duty under Section 11D of the Central Excise Act. The Commissioner (Appeals) disagreed, stating that the reversed amount was not excise duty but part of the price, directing the appellant to pay 8% of the collected amount with interest to comply with Rule 57CC. The appellant appealed against this direction and the imposed penalty, while the Department sought restoration of the original authority's order.

The appellant argued that no excise duty was payable on exempted goods, as the amount was paid in compliance with Rule 57CC due to availing credit on common inputs. They relied on a decision by the Larger Bench and a CBEC circular for support. The Department contended that the collected amount was represented as excise duty based on invoices issued to customers.

After considering the submissions, the Tribunal referred to the decision of the Larger Bench, emphasizing that Section 11D applies when duty collected from buyers is not deposited to the government. Since the 8% amount had already been paid to the revenue, Section 11D did not apply. The Tribunal also cited a Board clarification stating that as long as the 8% amount is paid to the government under Rule 57CC, Section 11D does not apply, even if recovered from buyers. Therefore, the Tribunal agreed with the appellant's argument, allowing the appeal and rejecting the Department's appeal.