Inaccurate description of Reimbursement collected under Rule 6(3)(1): CESTAT deletes Addition u/s 11D [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi has held that an inaccurate description of reimbursement collected under Rule 6(3)(1) and deletes addition u/s 11D.

The appellant, M/s Jindal Tubular (India) Limited manufactures MS pipes which it supplied to M/s Navayuga Engineering Company Limited for use in a project. the goods supplied under this project by the appellant were exempted by Notification No. 3/2004-CE.

In the invoice after the price of the pipes, there are two entries one pertaining to VAT at 5% and another pertaining to the amount paid under Rule 6(3)(1) indicated inaccurately as “Excise duty reversal at 6%.” The Department holds that the appellant has recovered this amount from its customers as representing excise duty and, therefore, the same needs to be deposited in the exchequer as per Section 11D.

Before the CESTAT the appellant by relying on the decision larger bench of the Tribunal in Unison Metals Vs. Commissioner of Central Excise submitted that what is recovered by them is only an amount which it was required to pay under Rule 6(3)(i) as a part of its obligations under CCR. It has not recovered any amount as representing Central Excise duty. Therefore, Section 11D is not applicable to this case as they have not recovered any amount whatsoever as representing the central excise duty.

The Tribunal observed that except for the inaccurate description of this amount recovered by the appellant from its customers, it is clear from the agreement that the buyer was not paying this amount thinking it to be excise duty but was paying it as reimbursement of an amount under Rule 6(3)(1) of CCR. Further, below the “excise duty reversal at 6%” in the invoice, it is mentioned in the “amount paid under Rule 6(3)(i) of CCR”.

The Coram of Mr. Justice Dilip Gupta, President, and Mr. P.V. Subba Rao, Member (Technical) by relying on the decision of the larger bench of the Tribunal in the case of M/s Unison Metals Ltd has set aside the demand.

Mr. R. Santhanam and Mr. Sanjay Kumar Singh appeared on behalf of the appellant and respondent respectively.

To Read the full text of the Order CLICK HERE

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