Section 11D does not apply to reimbursed amounts already paid as duty and not collected from buyers as excise duty.

Amounts reimbursed after duty payment were not liable to demand under Section 11D because the assessee had not collected them from buyers as excise duty and retained them. The Tribunal applied the settled principle that Section 11D operates only where a manufacturer collects an amount representing duty and fails to remit it to the revenue. Where duty or an equivalent amount has already been paid at clearance and is later recouped by reimbursement, no further recovery under Section 11D is warranted. The demand was therefore held unsustainable in favour of the assessee.

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Issues: Whether amounts paid under Rule 6(3)(b) of the CENVAT Credit Rules, 2004 and reimbursed by the Indian Railways could be demanded under Section 11D of the Central Excise Act, 1944.

Analysis: The amounts in question were not collected from buyers as duty and retained by the assessee in a manner attracting Section 11D. The Tribunal followed the Larger Bench view that Section 11D applies only where a manufacturer collects an amount representing excise duty and does not pass it on to the revenue. Where the duty or equivalent amount has already been paid at the time of clearance and is later recouped through reimbursement, there is no warrant for a further demand under Section 11D. The settled position was also noted to have been accepted administratively.

Conclusion: The demand under Section 11D was not sustainable, and the issue was decided in favour of the assessee.

Ratio Decidendi: Section 11D is attracted only to amounts collected from buyers as representing excise duty and retained by the manufacturer; it does not permit recovery of amounts already paid to the revenue and subsequently reimbursed.

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