Section 11D demand fails where no evidence shows buyers availed input credit on the goods sold.

Section 11D of the Central Excise Act was found inapplicable where the Revenue could not show that buyers had taken input tax credit or Cenvat credit on the goods sold after payment of 8% tax. The Tribunal relied on the earlier Larger Bench view and the relevant circular that, under the erstwhile Rule 57CC(1) corresponding to Rule 6(3) of the Cenvat Credit Rules, 2004, Section 11D was not attracted when the amount had already been paid to the Revenue and nothing was retained by the assessee. In the absence of evidence of credit availed by purchasers, the Revenue's contention remained conjectural, and the demand was not sustained.

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Issues: Whether the demand under Section 11D of the Central Excise Act, 1944 could be sustained in the absence of evidence that the buyers had taken input tax credit or Cenvat credit on the goods sold after payment of 8% tax.

Analysis: The Tribunal had rejected the Revenue's appeal on the ground that the circular and the earlier decision of the Larger Bench showed that, in cases covered by the erstwhile Rule 57CC(1) corresponding to Rule 6(3) of the Cenvat Credit Rules, 2004, Section 11D was not attracted where the amount had already been paid to the Revenue and nothing was retained by the assessee. The appellant was unable to produce any evidence that the purchasers had availed credit on the goods. In the absence of such evidence, the contention was held to rest only on conjecture.

Conclusion: The challenge to the Tribunal's order failed, and the demand was not sustained.

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