Section 11D cannot be used to demand again what was already paid under the credit reversal mechanism.

Amounts recovered from buyers as 8% of the value of exempted goods were not liable to a fresh demand under Section 11D where that amount had already been paid to the Government under the applicable credit reversal and CENVAT mechanism. Section 11D applies only when a person collects excise duty from another and retains it instead of remitting it to the Government. On the facts, the amount had already been deposited at clearance, so the collection did not create an additional payable duty element. Relying on the principle against double levy and a clarificatory circular, the demand was held unsustainable and Section 11D inapplicable.

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Issues: Whether amounts recovered from buyers as 8% of the value of exempted goods, when already paid to the Government under the relevant credit reversal mechanism, were liable to be demanded again under Section 11D of the Central Excise Act, 1944.

Analysis: The amount in question had already been paid to the revenue at the time of clearance of the goods. The mechanism under the earlier credit reversal rule and the corresponding CENVAT provisions required payment to the Government, and the collection from buyers did not mean that the assessee retained any amount representing duty. Section 11D applies only where a person collects an amount as excise duty and retains it instead of paying it over to the Government. The principle that excise duty is not to be levied twice over and the clarificatory circular were relied upon to hold that where the amount already stands deposited, no further demand can be raised under Section 11D.

Conclusion: Section 11D was held inapplicable, and the demand was set aside in favour of the assessee.

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