Section 11D does not apply to job-work debit notes where charges are for services, not excise duty.

Section 11D of the Central Excise Act did not apply to amounts recovered through debit notes in a job-work arrangement where clearances were made without sale. The amounts were recorded as handling and service charges, not as excise duty, and the statutory condition that duty be collected from the buyer was not met. For units under the compounded levy scheme, duty is paid on determined capacity rather than on each clearance, and Section 11D was treated as inapplicable. The resulting duty demand was unsustainable.

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Issues: Whether Section 11D of the Central Excise Act, 1944 applied to amounts collected through debit notes from merchant-manufacturers in a job-work arrangement under the compounded levy scheme.

Analysis: The goods were cleared on job work basis without sale, and the statutory requirement in Section 11D that duty be collected from the buyer was not satisfied. The amounts recovered under the debit notes were described and reflected as handling and service charges, not as excise duty. The Tribunal also noted that units operating under the compounded levy scheme under Section 3A pay duty on the basis of determined capacity, not on each clearance, and that Section 11D had been held inapplicable to such units.

Conclusion: Section 11D was not attracted and the duty demand was unsustainable.

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