ORDER
S.L. Peeran, Member (T)
1. By this appeal, the appellants are challenging the correctness of Order-in-Original No. 30/03-04(RP) dt. 29.9.2003 passed by the Commissioner of Central Excise, Visakhapatnam.
2. The appellants, a Public Sector Undertaking, are engaged in the manufacture of various Iron and Steel products falling under Chapter 72 of the schedule to the Central Excise Act, 1985. They are sending semis like billets, blooms etc. for conversion into rolled products to various job workers or conversion agents on payment of duty as “stock transfer”. The conversion agents, after conversion, clear the material to the customers as specified by the appellants in their delivery orders after paying duty. During the period in question when the re-rolled products are covered under the special procedure, the duty was paid by the conversion agents under the Hot Re-rolling Steel Mills Annual Capacity Determination Rules (HRSMACD), 1997. The DEPARTMENT, on scrutiny, found that during the period December 1997 to October 1999, the appellants had collected duty on such re-rolled products at higher rates than the one paid by the conversion agents through their delivery order and hence have raised demands in terms of Section 11D of the Central Excise Act for depositing the same in the Government’s account. The appellants contend that conversion agents convert blooms and billets into TOR steel, MS bars etc. and clear the converted material on payment of duty at Rs. 300 per MT under the compounded levy scheme under Section 3A(2) of the Central Excise Act. They were not taking credit of duty paid by the appellants. It is contended that the Headquarters Marketing Department issued a document called “delivery orders” to enable their customers to take delivery of the goods meant for them. Such delivery orders are issued both for the goods manufactured by the appellants themselves or for the goods manufactured by the conversion agents. The delivery orders for the goods manufactured by conversion agents are issued by the appellants since the purchase orders for such products are placed by the customer on them. They contend that the delivery orders are essentially in the nature of instructions either to their branches or to the conversion agents to Hanover the converted material to the customers or their representatives and is not a document meant for or addressed to the customers. They contend that apart from the delivery orders, the appellants also issue commercial invoices to the customers both for the products as well as for products manufactured by conversion agents. They contend that during period from December 1997 to 31.10.1999, they were using software for generating delivery orders for the delivery of the goods manufactured by them. The element of excise duty was getting indicated on the delivery orders by default. They noticed that even in the delivery order issued for the products manufactured by the job worker the excise duty was getting reflected by default. Therefore, they corrected the software. They contend that the delivery orders issued by them w.e.f. 1.11.1999 in respect of the products manufactured by the conversion agents did not indicate the element of excise duty separately.
3. The department conducted enquiries in and around February 2001 and their Additional Chief Manager (Marketing) clarified the position. However, the department did not accept their plea and issued show-cause notices directing them to deposit the amounts so collected through delivery orders.
4. It is the appellants’ contention that provisions of Section 11D are not applicable in the present case since the appellants are not manufacturer of goods in question. They contend that appellants cleared blooms and billets to the conversion agents/job workers on payment of duty on ad valorem basis. It is the conversion agents/job workers who paid duty on the converted products in terms of the HRSMACD Rules @ Rs. 300/- per MT. Therefore, it is the conversion agents/job workers who are the actual manufacturers of the goods in question. These conversion agents/job workers are independent of the appellants and the transactions between them and the appellants are’ on principal-to-principal basis. The fact that the department has accepted the payment of duty from the conversion agents/job workers under the HRSMACD Rules also indicated that even the department has recongnised the conversion agents/job workers as the actual manufacturers. Therefore, they contend that appellants not being manufacturer of the goods in relation to which the demand under Section 11D has been made, therefore the said section is not applicable. He also referred to the amended provisions of Section 11D which was retrospective brought into effect from 20.9.1991 wherein it has been clarified 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 the amount so collected to the credit of the Central Government.
5. The learned Counsel relied on the judgment rendered in the case of CCB, Bhopal v. Perfect Refractories wherein the Tribunal has held that the provisions of Section 11D would apply only if a person is liable to duty. It is also contended by the counsel that it is settled by the following decisions that the person liable to deposit amounts under Section 11D is only the person who manufacturers the end product i.e., the excisable goods:
(a) Bripranil Industires Ltd. v. CCE, Bangalore
(b) Bharat Petroleum Corporation Ltd. v. CCE, Meerut
(c) Hindustan Petroleum Corporation Ltd. v. CCE, Hyderabad 2002 (149) ELT 1294
(d) HPCLv. CCE, Vizag
(e) HPCLv. CCE, Vizag Final Order No. 917 & 918/2001 dated 11.6.2001
(f) HPCL v. CCE, Vizag Final Order No. 65/2002 dated 22.1.2002
(g) CCE v. Mahindra & Mahindra .
Ld. Counsel also submits that the quantification of demand is also not correct and has been wrongly done. Hence, he pleads that impugned order is required to be set aside by allowing their appeal.
6. Ld. SDR reiterated the departmental contention.
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 HRSMACDE 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 rale. 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 judgment clearly applies to the facts of the case. We find from all the judgments 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.
(Operative portion of this Order was pronounced in open court on conclusion of hearing)