Section 11D does not apply where Rule 57CC reversal has already been passed through the credit mechanism, not retained as duty.

Amounts reversed under Rule 57CC in respect of common inputs used for dutiable and exempted goods, and recovered from buyers of exempted goods, were not again demandable under Section 11D of the Central Excise Act. The Tribunal applied the Larger Bench principle that Section 11D is attracted only where an assessee retains amounts collected as representing excise duty; where the amount has already been reversed or passed on through the prescribed credit mechanism, no further liability arises. The contrary High Court decision cited by the Revenue was distinguished on different facts involving collection as excise duty in another context.

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Issues: Whether the amount reversed by the assessee under Rule 57CC of the Central Excise Rules, 1944 and recovered from buyers of exempted goods was liable to be deposited under Section 11D of the Central Excise Act, 1944.

Analysis: The assessee had cleared exempted goods after reversing 8% of the value under Rule 57CC in respect of common inputs used for dutiable and exempted products. The decisive question was whether the recovered amount remained with the assessee as an amount collected as excise duty. The Tribunal applied the Larger Bench ruling that where the amount reversed under Rule 57CC has already been passed on to the revenue through the credit mechanism and no amount remains retained by the assessee, Section 11D is not attracted. The Tribunal distinguished the contrary High Court decision relied on by the Revenue on the ground that it concerned different facts where the amount had been represented and collected as excise duty in a different context.

Conclusion: The amount reversed under Rule 57CC and recovered from buyers was not liable to be demanded again under Section 11D of the Central Excise Act, 1944; the issue was decided in favour of the assessee.

Ratio Decidendi: Section 11D applies only where an assessee retains amounts collected from buyers as representing excise duty and does not pass them on to the revenue; where the amount has already been reversed or paid over through the prescribed credit mechanism, no further demand under Section 11D lies.

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