Cenvat credit recovery cannot treat Rule 6 payment as irregular credit; invoice-based duty collection may fall under Section 11D.

Rule 6 of the Cenvat Credit Rules, 2002 required payment of 8% of the sale price on exempt clearances where common input credit was taken, and once that statutory amount was paid to the Government, the rule's object was satisfied. Recovery of an equivalent amount later collected from the buyer did not convert it into irregularly availed Cenvat credit, so it could not be recovered under Rule 12. However, where the invoices described the levy as "Excise Duty Payable" and the assessee's own records showed collection as excise duty, Section 11D of the Central Excise Act, 1944 was the proper recovery provision. The Rule 12 demand was therefore unsustainable.

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Issues: Whether the amount collected from the buyer, corresponding to 8% of the sale price paid to the Government in respect of exempt clearances, could be recovered from the assessee under Rule 12 of the Cenvat Credit Rules, 2002 as irregularly availed Cenvat credit, and whether the amount shown in the invoices as excise duty could only be proceeded against under Section 11D of the Central Excise Act, 1944.

Analysis: Rule 6 of the Cenvat Credit Rules, 2002 required payment of 8% of the sale price of exempted goods where common input credit was taken for dutiable and exempt goods. The assessee had paid that amount to the Government in respect of clearances of ammonium chloride to a buyer enjoying exemption. Once that statutory payment was made, the purpose of the rule stood satisfied. The later recovery of an equivalent amount from the buyer did not convert that sum into Cenvat credit or make it recoverable as irregularly availed credit under Rule 12. The Department had wrongly equated the amount paid under Rule 6 with credit taken on inputs. At the same time, the invoices showed the collection under the entry "Excise Duty Payable", and the assessee's own documentation represented the amount as duty of excise. That circumstance made Section 11D of the Central Excise Act, 1944 the appropriate recovery provision.

Conclusion: The demand under Rule 12 of the Cenvat Credit Rules, 2002 was unsustainable and was set aside. The amount, if otherwise recoverable, could be proceeded against under Section 11D of the Central Excise Act, 1944.

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