Section 11D recovery fails where collected duty is already paid to government; cash payment direction also lacks statutory support.

A demand under Section 11D of the Central Excise Act was held unsustainable because the duty element collected by the assessee had already been paid to the Government, so the statutory condition for recovery was not met. A further direction requiring partial payment in cash from PLA instead of reversal of Cenvat credit under Rule 6(3) of the Cenvat Credit Rules was also found unsustainable, because no statutory provision mandated such payment and the show cause notice had not proposed it. The impugned order was therefore not sustained on either ground and the assessee obtained full relief.

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Issues: (i) Whether the demand under Section 11D of the Central Excise Act, 1944 was sustainable when the amount collected had been paid over to the Government. (ii) Whether, in the absence of a specific statutory provision and without any proposal in the show cause notice, the assessee could be required to pay a portion of the amount in cash from PLA instead of by reversal of Cenvat credit under Rule 6(3) of the Cenvat Credit Rules, 2004.

Issue (i): Whether the demand under Section 11D of the Central Excise Act, 1944 was sustainable when the amount collected had been paid over to the Government.

Analysis: The amount demanded was treated as recoverable under Section 11D, but the factual position was that the duty element collected by the assessee had already been paid to the Government. In such a situation, the statutory condition for invoking Section 11D was not satisfied. The reasoning was held to be covered by the cited Tribunal decision on the same principle.

Conclusion: The demand under Section 11D was not sustainable and was rejected.

Issue (ii): Whether, in the absence of a specific statutory provision and without any proposal in the show cause notice, the assessee could be required to pay a portion of the amount in cash from PLA instead of by reversal of Cenvat credit under Rule 6(3) of the Cenvat Credit Rules, 2004.

Analysis: No provision was shown to require payment of duty only through PLA, and Rule 6 of the Cenvat Credit Rules, 2004 did not prescribe such a requirement. The show cause notice also did not propose recovery of any part of the amount in cash. The appellate direction therefore travelled beyond the notice and lacked legal support.

Conclusion: The direction to pay a portion in cash from PLA was unsustainable and was set aside.

Final Conclusion: The impugned order could not be sustained on either ground, and the assessee obtained full relief.

Ratio Decidendi: A demand under Section 11D cannot survive where the collected amount has already been paid to the Government, and a liability to pay in cash must rest on a clear statutory mandate and a corresponding proposal in the show cause notice.

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