Duty difference recovery under Section 11D failed where no procedural machinery existed to enforce the demand

Recovery of duty difference under Section 11D of the Central Excise Act was held unenforceable because, on the relevant date, the provision lacked the procedural machinery needed for implementation. The Tribunal tested the recovery against the law prevailing on the date of the notice and the original order, and found that without the requisite enforcement framework the demand could not be sustained. The impugned order was therefore set aside and the appeals were allowed in favour of the assessees.

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Issues: Whether the duty difference collected by the assessee could be recovered under Section 11D of the Central Excise Act, 1944 when, on the relevant date, no procedural machinery existed for its implementation.

Analysis: The appeals arose from a common order confirming recovery of the amount collected as difference between the duty shown to customers and the lesser duty actually paid. The Tribunal held that the legality of recovery had to be tested with reference to the position of law on the date of the notice and the original order. At that time, Section 11D did not contain the procedural framework necessary for enforcement of such recovery. In the absence of the requisite implementation mechanism, the demand could not be sustained.

Conclusion: The recovery under Section 11D was not enforceable on the relevant date and the impugned order was unsustainable; the appeals were allowed in favour of the assessees.

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