2011 (5) TMI 430 - AT - Central Excise

Demand - differential excise duty - Scrutiny - Classification - notification No. 130/83 dated 27.4.83 - the benefit of exemption was granted by the Government under the said Act knowing well that such exemption was meant for those manufacturers who are entitled to avail the incentive benefit under the Incentive Scheme dated 4.11.1987 - Once it is not disputed that whatever amount that was collected by the appellants was in terms of the said scheme one fails to understand how the said amount can be considered as an amount of duty in excess and determined under the said Act or Rules made thereunder to attract section 11D of the Act - Once it is clear that the amount collected cannot be recovered under section 11D it is not necessary to deal with other issues raised by the appellants in the matter in hand - Decided in favour of the assessee

Summary

Issues:
1. Maintainability of demand under section 11D of the Central Excise Act, 1944.
2. Bar of limitation regarding the recovery of the amount.
3. Interpretation of exemption notifications related to the Incentive Scheme.
4. Application of Section 11D for recovery of the alleged excess duty amount.

Analysis:

1. The case involved a dispute regarding the demand under section 11D of the Central Excise Act, 1944. The appellants contested the demand for Rs.28,01,370, claiming it was collected in accordance with an incentive scheme by the Ministry of Food and Supply. The department issued a show cause notice for recovery, which was contested by the appellants but confirmed by the adjudicating authority and Commissioner (Appeals), leading to the present appeal.

2. The appellants challenged the impugned order on the grounds of non-maintainability under section 11D and the bar of limitation. The appellants argued that the recovery was beyond the limitation period and the amount collected was in compliance with the exemption notifications. The Jt. CDR justified the order, citing relevant legal precedents and contending that any amount collected over the permissible limit under the notifications was recoverable under section 11D.

3. The interpretation of the exemption notifications related to the Incentive Scheme was crucial in determining the applicability of the demand under section 11D. The notifications granted exemptions to sugar cleared under the Incentive Scheme, indicating that the benefits were specifically designed for manufacturers availing the scheme. The scheme required surplus funds to be utilized for specific purposes, emphasizing the scheme's comprehensive approach towards the development of the sugar industry.

4. The application of Section 11D for the recovery of the alleged excess duty amount was a focal point of the judgment. The Tribunal analyzed the scheme, notifications, and the purpose behind the exemptions to conclude that the amount collected by the appellants was in line with the scheme's provisions. As the collected amount was not in contravention of the scheme, it could not be considered as an excess duty amount under the Act, rendering the demand under section 11D invalid. The Tribunal ruled in favor of the appellants, quashing the impugned order and disposing of the appeal accordingly.