2015 (1) TMI 372 - AT - Central Excise

Levy of penalty - Wrong payment of duty mentioning the registration code of sister concern - reversal of credit to original unit denied - Held that - The appellant unit is located at 14/5, Mathura Road, Amar Nagar, Faridabad and another unit of the same appellant is located in an adjoining premises at 13/6, Mathura Road, Amar Nagar, Faridabad. From the correspondence of the appellant with the department, it is clear that the duty for the month of August, 2009 by mistake was paid by the appellant in the account of their sister unit due to wrong mention of the assessee code and when the PAO did not accept the appellant s request for transfer of the amount paid in the name of second unit to the appellant s unit account, they have paid the duty again. In the circumstances of the case, I do not see how any provisions of Central Excise Rules warranting the imposition of penalty under Rule 25, has been contravened. In view of this, the impugned order upholding the penalty on the appellant is not sustainable. The same is set aside - Decided in favour of assesse.

Summary

Issues:
- Incorrect payment of Central Excise duty
- Imposition of penalty under Rule 25

Analysis:
1. Incorrect payment of Central Excise duty:
The appellant, a manufacturer of packing machinery, mistakenly paid Central Excise duty for the month of August, 2009 into the account of their sister unit located in adjoining premises. This error was discovered by the department during a review of the ER-1 return. The appellant promptly notified the Pay and Account Officer about the mistake and requested a transfer of the amount to the correct account. However, the request was denied, leading the appellant to pay the duty again along with interest. The department issued a show cause notice, demanding confirmation of the duty amount, interest, and imposing a penalty equal to the duty amount. The Assistant Commissioner confirmed the duty demand, interest, and imposed the penalty, which was upheld by the Commissioner (Appeals).

2. Imposition of penalty under Rule 25:
The appellant argued that there was no intention to contravene any provisions of the Central Excise Rules. They explained that the erroneous payment was a genuine mistake, and they took immediate corrective action by paying the duty again. The appellant contended that the penalty imposed under Rule 25 was unjustified in the circumstances. The Tribunal, after hearing both sides and examining the records, found that the appellant had rectified the error by making the additional payment promptly. The Tribunal concluded that there was no contravention of Central Excise Rules warranting the imposition of the penalty under Rule 25. Therefore, the Tribunal set aside the penalty imposed on the appellant, allowing the appeal.

In summary, the Tribunal ruled in favor of the appellant, setting aside the penalty imposed under Rule 25 for the incorrect payment of Central Excise duty. The judgment emphasized that the appellant had rectified the mistake promptly and had not contravened any provisions of the Central Excise Rules.