Cum-duty price computation controls excise valuation, while excess-duty recovery under Section 11D needs proof of actual overcollection.

A Section 11D demand under the Central Excise Act requires proof that an amount was actually collected in excess of duty properly payable; on the facts stated, the invoices reflected a cum-duty price and the record did not support double collection, so the Section 11D demand failed. Penalty under Rule 173Q was also unsustainable once that recovery basis fell away. However, the duty shown on the invoices had to be recomputed using the Supreme Court-approved cum-duty formula, and the remaining notices were remanded for fresh determination on that correct basis.

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Issues: (i) Whether the amount shown in the invoices was collected in excess of duty so as to attract Section 11D of the Central Excise Act, 1944. (ii) Whether penalty under Rule 173Q of the Central Excise Rules, 1944 was sustainable. (iii) Whether duty had to be reworked on the cum-duty price basis in accordance with the Supreme Court formula.

Issue (i): Whether the amount shown in the invoices was collected in excess of duty so as to attract Section 11D of the Central Excise Act, 1944.

Analysis: The invoices showed a cum-duty sale price and the duty element had to be worked backwards from that price. The figures described as discount were treated by the assessee as abatement towards excise duty, but there was no evidence of any collection over and above the amount actually payable on the cum-duty price. The demand under Section 11D proceeded on an assumption that duty was collected twice, but the record did not support such excess collection. At the same time, the assessee's own working was not in accordance with the formula approved for cum-duty price computation, and on the chart produced there was a small short-payment when the correct formula was applied.

Conclusion: The demand under Section 11D was not sustainable, though the invoices disclosed a short-payment of duty requiring recomputation under the proper method.

Issue (ii): Whether penalty under Rule 173Q of the Central Excise Rules, 1944 was sustainable.

Analysis: Penalty under Rule 173Q could not stand once the foundation for recovery under Section 11D failed. The materials did not establish that the assessee had removed goods in the manner required to attract the rule, and the short-payment issue required fresh computation rather than punitive action on the facts as found.

Conclusion: The penalty under Rule 173Q was not justified and was set aside.

Issue (iii): Whether duty had to be reworked on the cum-duty price basis in accordance with the Supreme Court formula.

Analysis: The assessee's own formula for working out assessable value from cum-duty prices was not accepted. The proper method was the formula laid down by the Supreme Court, and the matter for other notices required fresh determination on that basis. Since no complete working for those notices was available before the Tribunal, the adjudicating authority had to reassess duty, if any, on the correct basis.

Conclusion: The matter was remanded for recomputation of duty on the correct cum-duty basis.

Final Conclusion: The assessee succeeded on the principal demand under Section 11D and on penalty, but the duty liability required fresh computation on the correct cum-duty formula for the remaining notice.

Ratio Decidendi: A demand under Section 11D requires proof of actual collection of an amount in excess of the duty properly payable, and where the correct duty has not been computed on the prescribed cum-duty basis, the matter must be recomputed rather than upheld as a Section 11D recovery.

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