Section 11D recovery barred where duty was already deposited through CENVAT debit instead of cash payment

Section 11D of the Central Excise Act, 1944 could not be used to recover duty already deposited with the department, including where payment was made by debiting the CENVAT credit account rather than by cash. The article notes that the disputed amount had in fact been paid, and binding High Court authority treated such discharge as sufficient to defeat Section 11D recovery merely because the assessee did not avail the exemption and instead paid duty at a higher rate. On that basis, the demand under Section 11D was held unsustainable and the adverse finding was set aside.

---

---

Issues: Whether the amount of duty paid by debiting the CENVAT account, instead of availing the exemption and paying at the concessional cash rate, was recoverable under Section 11D of the Central Excise Act, 1944.

Analysis: The disputed amount had admittedly been deposited with the department, though through the CENVAT credit account. The only question was whether such payment could be treated as an amount recoverable under Section 11D. The issue was covered by binding High Court authority holding that where the duty element has already been discharged and the amount stands deposited, Section 11D recovery is not attracted merely because the payment was made by debit of CENVAT credit instead of cash.

Conclusion: The demand under Section 11D was not sustainable and the finding against the assessee was set aside.

Ratio Decidendi: Section 11D cannot be invoked to recover an amount that has already been deposited with the department, including through debiting CENVAT credit, merely because the assessee did not avail the applicable exemption and paid duty at a higher rate.

---