M/S. Pyrotech Electronics Pvt. Ltd vs Commissioner Of Central Excise

[Arising out of Order-In-Appeal No. 166 (HKS) CE/JPR-II/2006 dated 28.2.2006 and No. 456 (HKS) CE/JPR-II/2006 dated 28.7.2006 both passed by Commissioner of Customs & Central Excise (Appeals II), Jaipur]

For approval and signature:

Honble Mr Ashok Jindal, Member (Judicial)

Hon'ble Mr. B Ravichandran , Member (Technical)

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 should 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?

M/s. Pyrotech Electronics Pvt. Ltd. Appellants

Vs.

Commissioner of Central Excise Respondent

Jaipur I

Appearance:

Shri Bipin Garg, Advocate for the Appellants

Shri Ranjan Khanna, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Mr. B Ravichandran, Member (Technical)

Date of Hearing /decision: 07.08.2015

FINAL ORDER NO. A/ 52533-52534/2015-EX(DB)

Per B Ravichandran:

The issue involved in these two appeals is same and hence taken up together for decision.

2. The appellant are manufacturers of control panel, parts of electronic machinery etc. Some of their final products are exempt from payment of duty. Since they availed Cenvat credit on inputs used and did not maintain separate accounts they have paid an amount equal to 8% of value of exempted final products. The Revenue is of the view that since the appellant collected this amount also from the buyers of such exempted good, the same needs to the credited to Government as per provisions of section 11D of Central Excise Act, 1994. Proceedings were initiated resulting in confirmation of demands and imposition of penalty. On appeal, the orders were confirmed. Aggrieved by the said order of Commissioner (Appeals), the appellant is before us.

3. The appellants contended that the reversal of 8% of value of exempted goods is as per the conditions in Rule 6 of Cenvat Credit Rules. They are recovering the said amount from their buyers. There is no amount recovered by them as excise duty from the buyers. The provisions of Section 11D will not be attracted in this case. They relied on the fallowing decisions:

(a) Bharat Heavy Electricals Ltd.

[2012(286) ELT 256(Tri-Chennai)];

(b) Unison Metal Ltd.

[2010(253)ELT618 (Tri-Ahmd)];

(c) Viral Control Pvt. Ltd.

[2009(235)ELT 681 (Tri- Ahmd)];

(d) Pennar Industries Ltd.

[2007 (213) ELT 403 (Tri-Bang)];

(e) Ganga Engineers

[2008 (232) ELT 328(Tri-Del)]

It was pointed out that CBEC also clarified on the non-applicability of Section 11D in such situation vide circular No. 870/8/2008-CX dated 16.05.2008.

4. During arguments the learned Counsel for appellant stated that the Larger Bench decision of the Tribunal in Unison Metals is applicable to their case. Ld. AR reiterated findings of the lower authority.

5. Heard two sides. Perused appeal records.

6. The short point for decision is the applicability of provisions of Section 11D to a situation where the appellant collects 8% extra from the buyers of exempted goods to compensate the reversal of such amount in credit as per Rule 6 of Cenvat Credit Rules. The case laws cited supra are applicable to the issue in hand. The first reasoning is that the amount collected from the buyers has already been reversed and paid to the Government. Secondly, Section 11 D will be attracted only when amount is collected as duty and not paid to the exchequer. When the amount collected is not in the name of duty, Section 11D will not come in to the picture.

7. In view of the above discussion, we find no merits in the impugned orders and the same are set aside. The appeals are allowed with consequential relief, if any.

(operative part of the order pronounced in the open court)

( Ashok Jindal ) Member(Judicial)

( B Ravichandran )

Member(Technical)

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