Section 11D cannot recover amounts already paid for exempted clearances; later circular requirements cannot be applied retrospectively.

Section 11D of the Central Excise Act cannot be used to recover again an amount already paid to the Government under Rule 57CC for exempted clearances. The Tribunal applied prior decisions holding that, where the prescribed 8% payment had already been made in respect of exempted goods, the amount could not be treated as recoverable excise duty collected from buyers. It also held that a later circular and invoice endorsement requirements under Rule 6 of the Cenvat Credit Rules could not be applied retrospectively to clearances made in 2001-2002. The demand and penalty were therefore unsustainable, and the appellant obtained consequential relief.

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Issues: Whether the amount paid at 8% under Rule 57CC of the erstwhile Central Excise Rules, 1944 in respect of exempted goods could be demanded again under Section 11D of the Central Excise Act, 1944, and whether the demand and penalty could be sustained on the basis of a later circular and invoice endorsement requirements.

Analysis: The appellant had cleared both dutiable and exempted goods during the relevant period and had paid the prescribed 8% amount in respect of exempted clearances. The demand was founded on the premise that the said amount represented excise duty collected from buyers and was therefore recoverable under Section 11D. The Tribunal noted that the issue was already settled by prior decisions holding that Section 11D does not apply where the amount attributable to exempted goods has already been paid to the Government. The appellate authority had relied upon Circular No. 870/8/2008-CX dated 16-5-2008 and the endorsement requirement under Rule 6 of the Cenvat Credit Rules, 2004, although the clearances in question related to 2001-2002. The later circular could not govern the earlier period of dispute.

Conclusion: The demand and penalty were not sustainable.

Final Conclusion: The appeal succeeded and the appellant obtained consequential relief.

Ratio Decidendi: Section 11D cannot be invoked to demand again an amount already paid to the Government in relation to exempted clearances, and later circular-based procedural requirements cannot be applied retrospectively to earlier transactions.

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