Section 11D inapplicable where collected excise duty was already deposited through CENVAT credit, quashing recovery.

Section 11D of the Central Excise Act was held inapplicable where duty collected from buyers had already been deposited with the Department, including by use of CENVAT credit. The Court relied on the Board's circular clarifying that Section 11D does not apply once the collected duty is paid over to the Government, and that utilisation of credit to discharge duty on excisable goods does not alter that position. As the departmental authorities had not considered the circular, recovery under Section 11D on these facts was unsustainable and the recovery order was quashed.

---

---

Issues: Whether Section 11D of the Central Excise Act, 1944 applies where the amount collected as excise duty on nil-rated goods is deposited by debiting the CENVAT credit account.

Analysis: The amount collected from customers had already been deposited with the Department. The Board's Circular No. 651/42/2002-CX dated 7th August, 2002 clarified that Section 11D does not apply where duty collected has been deposited with the Government, and that the position does not change if money credit available with the manufacturer is utilised to pay duty on finished excisable products and the duty so collected is recovered from the buyer. The Court found that the departmental authorities had not considered the circular and that recovery under Section 11D on the stated facts was not sustainable.

Conclusion: Section 11D was held inapplicable and the recovery order was quashed. The question was answered in favour of the assessee and against the Department.

---