2003 (2) TMI 335 - AT - Central Excise

Summary

Issues involved:
Stay application for waiver of pre-deposit and stay of recovery in respect of penalty imposed under Rule 173Q of the Central Excise Rules, 1944.

Analysis:
The appellants sought waiver of pre-deposit and stay of recovery in relation to a penalty of Rs. 17,500/- imposed by the lower authorities under Rule 173Q of the Central Excise Rules, 1944. The department alleged that the appellants cleared their final product by paying duty with cheques issued without maintaining sufficient balance in their Personal Ledger Account (PLA). The adjudicating authority imposed a total penalty of Rs. 2,46,500/- on all manufacturers collectively, including the present appellants. The Commissioner (Appeals) upheld the penalty imposed on the appellants. The appellants argued that there was enough balance in their bank account when the duty payment cheques were received and honored, thus negating any mens rea to attract penal provisions. They cited legal precedents to support their case. The department contended that the allegation of insufficient balance in the PLA was not rebutted by the appellants.

Upon examination, it was found that the appellants had a strong arguable case. The penal provisions under Rule 173Q were invoked based on the allegation of insufficient balance in the PLA when issuing duty payment cheques. However, the cheques were honored, and the duty payments were accepted by the exchequer. The interest on delayed payments was also paid by the appellants. The non-maintenance of PLA might attract a different rule, not Rule 173Q. The department had accepted the duty payments and interest before issuing the show cause notice, effectively condoning any lapses. Therefore, there was no valid reason to invoke penal provisions against the appellants. As there was no criminal intent, the appellants were granted waiver of pre-deposit and stay of recovery pending the appeal. The matter was scheduled for hearing on a specific date along with connected appeals.