Section 11D inapplicable where Cenvat reversal amount already paid to the Government and later recovered from buyers.

Where the prescribed 8%/10% amount has already been paid to the Government under Rule 6(3)(b) of the Cenvat Credit Rules, 2004, its later recovery from buyers does not trigger Section 11D of the Central Excise Act, 1944. The reasoning was that Section 11D applies only when an amount is collected as excise duty without corresponding deposit at the time of removal, whereas the amount paid under the Cenvat Credit regime toward exempted goods is already treated as payment to the revenue. Accordingly, the demand under Section 11D was held unsustainable and relief was granted to the assessee.

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Issues: Whether the amount equal to 8%/10% paid under Rule 6(3)(b) of the Cenvat Credit Rules, 2004, and later recovered from buyers, is again payable to the Department under Section 11D of the Central Excise Act, 1944.

Analysis: The amount paid under the Cenvat Credit scheme towards exempted goods is treated as a payment already made to the revenue. The larger bench view relied upon in the order held that Section 11D applies only where an amount is collected as excise duty without corresponding deposit at the time of removal. The Board's circular also clarified that where 8% or 10% has already been paid under the relevant excise credit rules, Section 11D does not apply even if the same amount is recovered from buyers, because the amount is not retained by the assessee as duty.

Conclusion: The demand under Section 11D was not sustainable and the appeal was allowed in favour of the assessee.

Ratio Decidendi: Where the prescribed 8%/10% amount has already been paid to the Government under the Cenvat Credit regime, its recovery from buyers does not attract Section 11D of the Central Excise Act, 1944.

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