Section 11D demand fails where collected amount was already reversed under excise rules and not retained by the assessee.

Section 11D of the Central Excise Act was held inapplicable where the amount collected from customers had already been reversed under Rule 57CC for common inputs used in exempted clearances and no amount was retained by the assessee. Following the Larger Bench view, the Tribunal held that Section 11D applies only when a manufacturer collects an amount as duty and keeps it without remitting it to the revenue, so the demand was set aside. The under-valuation issue was not pursued and did not survive for adjudication.

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Issues: Whether the demand under Section 11D of the Central Excise Act, 1944 was sustainable in respect of the 8% amount reversed under Rule 57CC of the Central Excise Rules, 1944 and collected from customers.

Analysis: The dispute on under-valuation was not pursued and did not survive for adjudication. On the remaining issue, the amount had been reversed under Rule 57CC for common inputs used in exempted clearances, and it was undisputed that the same amount had been collected from customers. The decisive question was whether Section 11D could be invoked when the amount so collected had already been accounted for in the statutory reversal and no amount remained retained by the assessee. The Tribunal followed the Larger Bench view that Section 11D is attracted only where a manufacturer collects an amount as duty and retains it without remitting it to the revenue. Where the amount has already been paid or reversed under the applicable excise mechanism and is not retained, Section 11D has no application.

Conclusion: The demand under Section 11D was not sustainable and was set aside.

Final Conclusion: The appeal succeeded only on the Section 11D issue, while the unpressed under-valuation challenge remained outside adjudication, resulting in a partial allowance of the appeal.

Ratio Decidendi: Section 11D cannot be invoked to recover an amount already reversed or paid under the governing excise scheme where the assessee has not retained the amount collected from customers.

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