Section 11D inapplicable where Rule 6 amounts were reimbursed and already paid to the Government

Amounts debited under Rule 6(3)(b) of the Cenvat Credit Rules and recovered from the buyer as reimbursement were not treated as excise duty for Section 11D purposes because the invoices and notice showed only reimbursement of the price, with the corresponding 8%/10% already paid to the Government. The Tribunal also followed the earlier departmental acceptance and the Board circular stating that Section 11D does not apply where the amount payable under the former Rule 57CC or Rule 6 is remitted to the Government even if recovered from buyers. On the recorded facts, the education cess demand was also not sustainable because the related amounts had already been paid by the supplier unit.

---

---

Issues: Whether the amounts debited under Rule 6(3)(b) of the Cenvat Credit Rules and recovered as reimbursement from the buyer attracted liability under Section 11D of the Central Excise Act, 1944, and whether the education cess demand was sustainable.

Analysis: The amount collected through the invoices was found to be a reimbursement of the price of bogies and couplers, with the corresponding 8%/10% already debited by the Belgharia unit under Rule 6(3)(b). The invoices and the show cause notice showed that the amount was not separately recovered as excise duty in a manner that would attract Section 11D. The Tribunal also relied on the earlier order accepted by the Department and the Board circular clarifying that where the amount payable under the erstwhile Rule 57CC or Rule 6 is paid to the Government, Section 11D does not apply even if the amount is recovered from buyers. The education cess demand was also not sustainable on the facts recorded, as the related amounts had been paid by the supplier unit.

Conclusion: Section 11D was held inapplicable and the demand was not sustainable; the assessee succeeded.

---