Section 11D inapplicable to job work clearances without sale; excess amounts recovered as charges cannot be treated as duty from a buyer.

Section 11D of the Central Excise Act applies only where a person liable to pay duty collects an amount in excess of the duty assessed or determined from a buyer as excise duty in a sale transaction. On these facts, the respondents were job workers processing textile fabrics for merchant manufacturers, with no sale and no buyer in the statutory sense; amounts recovered were treated as handling or other charges. Section 11D was therefore inapplicable, and the demand and penalty could not be sustained.

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Issues: Whether Section 11D of the Central Excise Act, 1944 applied to a job worker processing textile fabrics under the compounded levy scheme where the amount collected in excess was alleged to represent duty.

Analysis: The liability under Section 11D arises only when a person liable to pay duty has collected an amount in excess of the duty assessed or determined from the buyer of excisable goods as representing excise duty. The respondents were job workers processing fabrics for merchant manufacturers, and the transaction did not involve sale. In such a case there is no buyer in the statutory sense. The Tribunal followed the earlier view that where goods are cleared without sale, and where the amounts recovered are shown as handling or other charges, Section 11D is not attracted. The same principle had also been affirmed by the High Court in a similar matter.

Conclusion: Section 11D was held to be inapplicable to the respondents, and the demand and penalty could not be sustained.

Ratio Decidendi: Section 11D applies only where excess duty is collected from a buyer in a sale transaction; it does not apply to job work clearances without sale under the compounded levy regime.

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