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May 2011

(2011) 21 STR 503 (Tri.-Chennai) — Nagappa Motors v. CCEx., Madurai.

By Puloma Dalal, Jayesh Gogri Chartered Accountants
Reading Time 1 mins
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For the periods prior to 10th May, 2008, excess amount collected representing excise duty cannot be demanded from manufacturer u/s. 11D of the Central Excise Act.

Facts:
The assessee provided services under ‘authorised service station’ to various customers of Hero Honda Motors Ltd. The service tax was collected from Hero Honda Motors Ltd. and only 50% of the amount collected was deposited into the Government Treasury. Section 11D of the Central Excise Act was invoked for recovery of amount collected from the manufacturer along with interest and penalty.

Held:
During the period under consideration, section 11D was applicable when the amount was collected from buyers. Since Hero Honda Motors Ltd. was manufacturer and not the buyer of the goods, the appellants were not liable to pay such amount collected. Since amount need not be deposited, interest and penalty was also not leviable.

Comment:
Section 11D was amended through the Finance Act, 2008 and Ss. (1A) has been inserted for plugging such loop-hole in the Central Excise law and therefore, now excess amount received from any person as excise duty needs to be deposited into the Government Treasury.

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