Section 11D does not apply to amounts paid under the Cenvat credit regime for exempted clearances and later recovered from buyers.

Section 11D of the Central Excise Act, 1944 does not apply where an assessee pays the prescribed 8% or 10% amount under the Cenvat credit mechanism for exempted clearances and later recovers the same amount from buyers through supplementary invoices. The operative principle is that such recovery is not retention of unpaid duty, because the amount has already been paid to the Government under the applicable Cenvat credit provisions. On that basis, the demand could not be sustained, and the connected interest and penalty also did not survive.

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Issues: Whether the amount equal to 8% or 10% reversed under the Cenvat Credit Rules and recovered from buyers in respect of exempted clearances was liable to be demanded under section 11D of the Central Excise Act, 1944.

Analysis: The amount in question had been paid by the assessee in terms of the Cenvat credit mechanism applicable to exempted clearances and was later recovered from customers through supplementary invoices. The settled view, as reflected in the cited decisions and the Board's clarification, is that section 11D does not apply where the amount recovered from buyers corresponds to an amount already paid to the Government under the relevant Cenvat credit provisions and is not retained as unpaid duty by the assessee. The facts were found to be identical to the earlier decisions relied upon.

Conclusion: Section 11D of the Central Excise Act, 1944 was not attracted and the demand, interest and penalty could not survive.

Ratio Decidendi: Section 11D does not apply to amounts equal to the prescribed percentage paid under the Cenvat credit regime for exempted clearances, even if the same amount is recovered from buyers.

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