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TMI Blog2024 (5) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the appellant. 2. The appellant manufactures printed material which were chargeable to Central Excise duty during the relevant period (2016-17). It entered into a contract with the Board of Secondary Education [BSE] of Madhya Pradesh to supply 76 lakh answer sheets at an agreed price. If the quality of the answer sheets were not as per the norms, the contract provided for a deduction of 20% to be made from the cost. 3. In January 2017, the appellant manufactured and cleared the entire quantity of answer sheets whose assessable value was Rs. 2,54,58,252 and central excise duty was Rs. 5,09,200/- and declared them in the ER1 returns filed with the department. Due to deficiency in quality, BSE deducted some amounts and paid the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f goods are sold in one year, they are accounted for in that year and duty is paid in that year but the sale proceeds may be received much later. Thus, the amount received in a year from BSE may be more than the goods sold to it by the appellant ( if some payments of previous year were received during that year) or less than the value of the goods sold to it by the appellant (if some payments are not made during that year but are made in the following year); (iii) As far as the Central Excise duty is concerned, it is payable on removal whether or not the buyer pays for the goods. Accordingly, central excise duty was paid; (iv) TDS under the Income tax Act, however, has to be made by the payer on the amounts paid. Form 26AS is a compilat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs or capital goods are removed as such, the manufacturer has to pay an amount equal to the CENVAT credit availed on them. (iv) The impugned order may be upheld and the appeal may be dismissed. Findings 8. We have considered the submissions on both sides and perused the records. Evidently, the SCN, OIO and the impugned order have confirmed the demand on the wrong presumption that central excise duty is to be levied on the amounts received. Section 3 of the Central Excise Act, 1944 [Act] reads as follows: "3. Duty specified in the Fourth Schedule to be levied.- (1) There shall be levied and collected in such manner as may be prescribed a duty of excise to be called the Central Value Added Tax (CENVAT) on all excisable goods (exclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e past dues, as interest, as penalty, as a loan, as an investment, etc. It is not open to the departmental officers to demand central excise duty on any amount received. Duty can only be charged on the excisable goods manufactured or produced in India at the appropriate rates. 12. Duties of excise become payable on removal of goods (Rule 2 of the Central Excise Rules, 2002) and have to be paid by the sixth day of the following month (Rule 8). This payment is not contingent on the receipts for the goods removed and sold. The amounts may be paid in that month, in advance or much later. Regardless of when the payment is received or not received, duty becomes payable on removal and has to be paid by the sixth day of the following month. Natura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which militates against the very basis of excise duty which is chargeable only on excisable goods manufactured or produced. 16. The appellant had an explanation as to why the amounts received as per Form 26AS were more than the value of the goods manufactured and cleared as per ER1 returns. According to the appellant that the amounts pertained to past supplies. 17. In the impugned order, the Commissioner (Appeals) rejected this explanation on the ground that the appellant could not show the reconciliation. The question which arises is on whom does the burden of proof lies". Section 102 of the Evidence Act clarifies this position and it reads as follows: "102. The burden of proof in a suit or proceeding lies on that person who would fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the capital goods. 21. This demand of central excise duty on the capital goods sold by the appellant (which were not manufactured by it at all) is beyond the scope of the charging section 3 of the Central Excise Act and also beyond the legislative powers of the Union as per entry 83 of List 1 of the Seventh Schedule of the Constitution. 22. To sum up, we find that the SCN, the OIO and the impugned order were issued under the incorrect understanding of law that central excise duty could be levied on payments received (whether or not they were related to the excisable goods manufactured or produced and sold) and on goods sold through commercial invoices (even if they were not manufactured or produced). 23. The impugned order, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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