2003 (9) TMI 484 - AT - Central Excise

Summary

Issues:
1. Imposition of penalty by the Commissioner (Appeals) and subsequent appeal by the Revenue.
2. Rectification of error in debiting duty through modvat credit instead of in PLA.
3. Requirement of payment of interest on delayed payment in PLA.

Analysis:

Issue 1: Imposition of Penalty
The Revenue appealed against the order of the Commissioner (Appeals) setting aside the penalty but confirming the requirement for appropriate interest payment by the appellants. The Commissioner (Appeals) based the decision on the fact that the duty remittance through modvat was rectified promptly by paying through the PLA upon realizing the mistake. It was emphasized that the credit in question was not a fresh credit but a carried-over credit, hence no prior permission was necessary. The absence of fraud or suppression of facts, coupled with the rectification made before the issuance of the show cause notice, led to the setting aside of the penalty. The Tribunal upheld this decision, citing relevant case law and highlighting that no penalty should be imposed if errors are rectified before the show cause notice is issued.

Issue 2: Rectification of Error in Debiting Duty
The mistake made by the appellants in debiting the duty through modvat credit in RG 23C Part-II instead of in PLA was acknowledged. However, upon realizing this error, the appellants promptly rectified it even before receiving the show cause notice from the Department. The Tribunal noted that this rectification demonstrated that there was no intention to evade payment of duty. The citations referred to by the Commissioner (Appeals) and the advocate supported the view that if errors are corrected before the issuance of the show cause notice, no penalty should be levied. Consequently, the Tribunal found no fault in the impugned order and upheld the decision to reject the Revenue's appeal.

Issue 3: Payment of Interest on Delayed Payment in PLA
The argument put forth by the Revenue that penal action should be taken due to the deliberate mistake in debiting duty in RG 23C Part-II instead of in the PLA was considered. However, the Tribunal emphasized that the prompt rectification of the error by the appellants negated any intention to evade payment. The Tribunal found that the appellants had rectified the mistake before any formal action was taken against them, aligning with legal precedents that support the non-leviability of penalties in such cases. Therefore, the Tribunal concluded that there was no merit in the Revenue's appeal and rejected it.

In conclusion, the Tribunal upheld the decision to set aside the penalty imposed by the Commissioner (Appeals) and confirmed the requirement for the appellants to pay appropriate interest on the delayed payment in PLA, emphasizing the importance of rectifying errors promptly to avoid penal consequences.