Rpg Cables Ltd. Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
2. rpg cables ltd., the appellant, purchased cable jointing kits from their manufacture and sold them to its own customers. while doing so, it recovered from the customer's amounts as representing excise duty on these kits which were greater than the amounts that the manufacturer actually paid. on this being pointed out to it, it paid to the department the difference between the duty paid by the manufacturer and the amounts that it collected from its buyers. the notice issued to it proposed to appropriate these amounts under section 11ad of the act, demanded interest under section 11ab of the act and proposed penalty under section 11ac. adjudicating on the notice, the additional commissioner confirmed the proposal in the notice, demanded interest and imposed penalty. his order having been confirmed by the commissioner (appeals), the matter is now before us.3. counsel for the appellant does not dispute the claim of the department towards recovery of the amounts which it collected from its buyers as representing duty. his arguments are limited to the penalty and the inter- est. his contention is that the amounts that were recovered by the appellant from its customers are in no manner excise duty. it was the manufacturer that was required to pay duty, and not the appellant. the amounts only represented duty, and hence for duty section 11ab and section 11ac which would apply in cases where duty of excise has not been levied or paid or has been short levied or short paid or erroneously different. the departmental representative reiterates what the commissioner (appeals) has found.4. the arguments of the counsel for the appellant have to be accepted.the amounts collected by the manufacturer from its customers representing duty are liable to be paid to the government only by virtue of the provisions of section 11d of the act and which provide for credit to the government of any amount collected as "representing duty of excise". it is obvious that these amounts were by no means duty, such duty had been paid by the manufacturer and the appellant before us is not liable to payment of such excise duly. the provisions of section 11ab and section 11ac therefore will not apply.5. the finding of the commissioner (appeals) that the penalty has been imposed under section 11ac lead with rule 173q is clearly erroneous.the show cause notice does not cite rule 173q at all. his findings with regard to the acceptance of bona fides on the part of the appellant are no doubt true. however, in the absence of statutory provisions the absence of bona fides is not enough to justify the penalty.6. the appeal is accordingly allowed and the orders of the commissioner (appeals) confirming liability to interest under section 11ab and penalty under section 11ac are set aside.

Judgment:
2. RPG Cables Ltd., the appellant, purchased cable jointing kits from their manufacture and sold them to its own customers. While doing so, it recovered from the customer's amounts as representing excise duty on these kits which were greater than the amounts that the manufacturer actually paid. On this being pointed out to it, it paid to the department the difference between the duty paid by the manufacturer and the amounts that it collected from its buyers. The notice issued to it proposed to appropriate these amounts under Section 11AD of the Act, demanded interest under Section 11AB of the Act and proposed penalty under Section 11AC. Adjudicating on the notice, the Additional Commissioner confirmed the proposal in the notice, demanded interest and imposed penalty. His order having been confirmed by the Commissioner (Appeals), the matter is now before us.

3. Counsel for the appellant does not dispute the claim of the department towards recovery of the amounts which it collected from its buyers as representing duty. His arguments are limited to the penalty and the inter- est. His contention is that the amounts that were recovered by the appellant from its customers are in no manner excise duty. It was the manufacturer that was required to pay duty, and not the appellant. The amounts only represented duty, and hence for duty Section 11AB and Section 11AC which would apply in cases where duty of excise has not been levied or paid or has been short levied or short paid or erroneously different. The departmental representative reiterates what the Commissioner (Appeals) has found.

4. The arguments of the counsel for the appellant have to be accepted.

The amounts collected by the manufacturer from its customers representing duty are liable to be paid to the Government only by virtue of the provisions of Section 11D of the Act and which provide for credit to the Government of any amount collected as "representing duty of excise". It is obvious that these amounts were by no means duty, such duty had been paid by the manufacturer and the appellant before us is not liable to payment of such excise duly. The provisions of Section 11AB and Section 11AC therefore will not apply.

5. The finding of the Commissioner (Appeals) that the penalty has been imposed under Section 11AC lead with Rule 173Q is clearly erroneous.

The show cause notice does not cite Rule 173Q at all. His findings with regard to the acceptance of bona fides on the part of the appellant are no doubt true. However, in the absence of statutory provisions the absence of bona fides is not enough to justify the penalty.

6. The appeal is accordingly allowed and the orders of the Commissioner (Appeals) confirming liability to interest under Section 11AB and penalty under Section 11AC are set aside.