ORDER
S.L. Peeran, Member (J)
1. All these three appeals raise a common question of law and facts and hence they are taken up together for disposal as per law. The demands have been confirmed in terms of Section 11D of the Central Excise Act. The appellants had received 3% to 5% cost towards waste and scrap. They were reversing the credit of the rale of 3% to 5% on a total receipt of steel for the convenience of accounts procedure. Their contention is with regard to recovery of material cost on rejected quantity, they received from job worker. They Subjected them inspection/check at factory and in case if it is found defective due to job work, they allowed 3% as allowance and in excess of 3% allowance, recovery is made towards cost of materials and no recovery towards Excise Duty and Sales Tax. They contend that the recovery cost has been fixed during 1994 based on the cost of materials during the relevant period and they have not received recovery stock till date. Whatever raw material cost recovered from the job worker in excess of permitted level of 3% to 5% as scrap is rejected due to checks/inspection at their factory and duty is paid on the said scrap and there is no double benefit to them. They contend that they recovered raw material cost based on the cost arrived at in the year 1994 even though there is considerable increase in cost of raw material. The raw material received back on job work in excess of tolerance limit of 3% to 5% is also duly accounted as scrap and sold on payment of duty and there is no Revenue loss to the Govt. and hence Section 11D is not applicable. However, their contention has not been accepted by the authorities and have confirmed the amounts.
2. The learned Counsel submits that Section 11D is not attracted and that there is, in similar circumstances, judgment of this bench rendered in the case of Bripanil Industries Ltd. v. CCE, Bangalore .
3. The learned SDK reiterated departmental view.
4. On a careful consideration of the submissions made, we notice that the issue is covered by the cited judgments. In the case of Bripanil Industries Ltd. (supra), the Tribunal, after due consideration of the provisions under 11D read with Section 11A in an identical situation, clearly held that the provisions of Section 11D have not been satisfied and, therefore, the proceedings for recovery of AED has been set aside on the ground that the provisions of Section 11D of Central Excise Act is not applicable. In the case of M/s. Rashtriya Ispat Nigam Ltd. v. CCE Final Order No. 750/2005 dated 5-5-2005, the Tribunal, on like facts and circumstances of the case, examined the issue and held in paras 7 and 8 as follows:
7. On a careful consideration of the submissions, we find great force in the submissions made by the appellants. Admittedly, the duty has been paid by the conversion agents/job workers in terms of provisions of HRSMACD Rules. In terms of the judgments cited by the counsel, the amounts cannot be demanded against the appellants. The finding portion recorded in the case of CCE v. Perfect Refractories (supra) is reproduced herein below:
The assessee is a small scale manufacturer. It recovered certain amounts describing them as surcharge in addition to the price of the goods. The Revenue contends that the surcharge represented the excise duty payable on the goods and, therefore, amount so collected should be deposited with the Central Government in terms of Section 11D of the Central Excise Act.
2. Section 11D stipulates that every person who has collected any amount from the buyer of any goods in any manner as representing duty of excise, shall forthwith pay the amount so collected to the credit of the Central Government. Appellant was wholly exempt in terms of exemption notification during part of the period. For remaining period duty was payable by him at reduced rate. No evidence has been brought on record to show that the assessee was, in any manner, representing the surcharge as duty of excise. In any case, during the period of exemption he was not liable to pay any duty at all. In these circumstances, Revenue’s claim can only be treated as a mere presumption, lacking in any evidence to show that the surcharge collected was represented as duty of excise.
3. In view of what is stated above, we find the case to be entirely lacking in evidence. The appeal fails and is rejected.
8. The above judgement clearly applies to the facts of the case. We find from all the judgements cited above, that the demand cannot be raised against a person who has not collected duty. Further more, on a reading of the amended provisions of Section 11D, which has retrospective effect, it is seen that it is only a person who is liable to pay duty under the Act and who has collected any amount in excess of the duty assessed or determined and paid on any excisable goods is required to pay the amount so collected to the credit of the Central Govt. In the present case, the conversion agents/job workers have paid duty in terms of the said HRSMACD Rules and there is no liability arising against the appellants and the department cannot proceed to recover the amount under Section 11D of the Act. The appellants’ contention holds merit and respectfully following the ratio of the citations referred to the impugned order is set aside and the appeal is allowed with consequential relief, if any.
5. We find that the ratio of both the above judgments clearly apply to the facts of the case. Respectfully following the ratio of the same, the impugned orders are set aside and the appeals are allowed.
(Operative portion of this Order was pronounced in open court on conclusion of hearing)