2002 (3) TMI 386 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 8 of the Central Excise (No. 2) Rules, 2001 regarding duty payment on a fortnightly basis.
2. Application of punitive measures for defaulters under sub-rule (4) of the Rules.
3. Punishment for three successive lapses in duty payment.
4. Clarification on the discharge of duty liability upon crediting the amount to the Central Government's account.
5. Interpretation of the Ministry's explanation in the proper perspective.

Issue 1 - Interpretation of Rule 8:
The appellants were operating under Rule 8 of the Central Excise (No. 2) Rules, 2001, allowing payment of duty on a fortnightly basis. The rule specifies the deadlines for duty payment for each fortnight. The duty liability is deemed discharged only when the amount is credited to the Central Government's account by the specified date.

Issue 2 - Punitive Measures for Defaulters:
Sub-rule (4) of the Rules imposes punitive measures for defaulters, with repeated failures resulting in the forfeiture of the duty payment facility for a specified period. The applicants faced punishment for three successive lapses in duty payment.

Issue 3 - Punishment for Lapses:
The appellants were penalized for three consecutive lapses in duty payment, as detailed in the provided table showing the duty payable, amount, payment dates, and remittance details for each fortnight.

Issue 4 - Clarification on Duty Liability Discharge:
The appellants argued that once the cheque is cleared, their duty obligation should be considered discharged. They highlighted the process where the bank debits the licensee's account, credits its own account, and then transfers the amount to the Government's account. The Ministry's clarification emphasized that duty liability is discharged upon depositing the amount in the bank, regardless of when it is credited to the Government's account.

Issue 5 - Interpretation of Ministry's Explanation:
The Tribunal examined the Ministry's explanation and clarified that the duty liability is considered discharged when the bank receives the duty amount, whether through cheque deposit or cash/draft payment. The Tribunal found that the original authority and the Commissioner (Appeals) did not interpret the explanation correctly, and the citation of a High Court judgment was deemed irrelevant.

In conclusion, the Tribunal granted a stay on the impugned orders, allowing the appellants to continue benefiting from the duty payment rule. The decision was based on the proper interpretation of the Ministry's explanation, emphasizing the discharge of duty liability upon depositing the amount in the bank, rather than when it is credited to the Government's account.