Section 11D cannot apply where the exempted-clearance amount was already paid under Rule 57CC despite recovery from buyers.

Where the prescribed 8% payable under the exempted-clearance scheme had already been deposited to the Government, Section 11D of the Central Excise Act could not be invoked merely because the same amount was recovered from buyers and shown in invoices. The amount had the character of a statutory payment under Rule 57CC, not an unpaid sum retained as duty, and the Board clarification supported that position. The demand under Section 11D was therefore not sustainable.

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Issues: Whether the amount of 8% paid under Rule 57CC in respect of exempted goods, though recovered from buyers and reflected in invoices, could again be demanded as excise duty under Section 11D of the Central Excise Act, 1944.

Analysis: The goods in question were exempted, so no excise duty was payable on their clearance. The statutory obligation was only to comply with the scheme governing common inputs and exempted clearances under Rule 57CC. The amount already paid under that rule stood deposited to the revenue, and Section 11D applies to cases where a person collects an amount representing duty and retains it without corresponding duty having been paid. The real character of the amount recovered from buyers was held to be immaterial for Section 11D once the 8% amount had already been paid to the Government. The Board clarification referred to the same position and stated that Section 11D would not apply where the prescribed percentage had been paid under the relevant rule, even if recovered from buyers.

Conclusion: Section 11D was held inapplicable, and the demand based on that provision was not sustainable. The assessee succeeded and the Department failed.

Ratio Decidendi: Where the prescribed percentage payable under the exempted-clearance scheme has already been paid to the Government, Section 11D cannot be invoked merely because the amount was recovered from buyers and shown in invoices.

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