2008 (4) TMI 302 - AT - Central Excise

After scrutiny of the records the revenue came to the conclusion, that the appellants have availed credit on the date of the cheque when it was issued and not on the date of realization of the cheque - On perusal of the records, it is seen that the amount of cheques for which the credit was raised in the PLA was not dishonoured. The said amount was credited to the Government treasury albeit subsequently - imposition of penalty under Rule 173Q of CER not justified

Summary

Issues:
- Imposition of penalty under Rule 173Q of the Central Excise Rules, 1944 for availing credit in the PLA based on the date of cheque issuance rather than realization.
- Applicability of penalties when cheques were not dishonored and the amount was credited to the Government treasury subsequently.

Analysis:
1. Imposition of Penalty under Rule 173Q: The appeals were against an order-in-appeal where the appellants had presented cheques to the bank for raising credit in the PLA without waiting for acknowledgment receipt on TR6 challan. The revenue contended that credit was availed on the date of cheque issuance, leading to a show cause notice for penalty under Rule 173Q. The adjudicating authority imposed penalties, which were reduced by the Commissioner (Appeals). The Tribunal considered the issue in light of previous decisions and found that penalties were unjustified. The Tribunal emphasized that since the cheques were eventually encashed by the Revenue without any dishonor, the date of presentation of the cheque should be considered for taking credit, as per the Tribunal's earlier rulings.

2. Applicability of Penalties: The Tribunal referred to the case of India Cements and other precedents to establish that penalties cannot be imposed when there is no intention to evade payment of duty. In this case, the Commissioner had already acknowledged that there was no such intention. The Tribunal reiterated that since the cheques were honored and the amount was credited to the Government treasury, the penalties were unwarranted. Following the Division Bench decision, the Tribunal set aside the impugned order and allowed the appeals with consequential relief. The Tribunal held that the penalties were not justifiable in the absence of any dishonor of the cheques and ruled in favor of the appellants, emphasizing the importance of the date of presentation of the cheque for availing credit.

In conclusion, the Tribunal found the penalties imposed under Rule 173Q to be unjustified as the cheques were eventually encashed without any dishonor, leading to the acceptance of the appellants' contentions. The judgment highlighted the significance of the date of presentation of the cheque for availing credit in the PLA and set aside the penalties based on the established legal principles from previous decisions.