2023 (11) TMI 153 - AT - Central Excise

Demand of duty alongwith interest and penalty - appellant have deposited the demand even though under wrong registration number which was otherwise surrendered and the same was accepted by the department - HELD THAT - The only mistake that inadvertently happened on the part of the appellant is that they have mentioned wrong registration while making the payment of excise duty. Therefore, except such mistake there is not a case of non-payment of duty, hence, the demand of duty cannot be sustained. Consecutively, the demand of interest and imposition of penalty shall also not sustain - the appellant had a bona fide view that the department have rectified the mistake occurred during the payment of excise duty under wrong registration number therefore, the revenue instead of issuing the show cause notice should have carried out the rectification in their record and closed the matter - it is not a mistake of the appellant only but equally it is a system fault of the department for which the appellant should not be made to suffer. The demand of duty which was already paid and corresponding interest and penalties are not sustainable. Hence, the impugned order is set aside. Appeal is allowed.

Summary

Issues:
The issues involved in the judgment are the inadvertent payment of duty under the wrong registration number, issuance of a show cause notice demanding duty, interest, and penalty, and the appellant's request for rectification of the error.

Issue 1: Inadvertent Payment of Duty Under Wrong Registration Number
The appellant was granted a new registration certificate after surrendering the previous one due to a fire incident. However, during a specific period, the appellant inadvertently paid duty under the old registration number. The appellant requested the department to rectify this error, but a show cause notice was issued demanding duty of Rs. 98,40,743. The Tribunal found that the appellant's mistake was genuine and there was no case of non-payment of duty, leading to the conclusion that the demand of duty, interest, and penalty cannot be sustained.

Issue 2: Request for Rectification and Legal Precedents
The appellant argued that the mistake was unintentional and approached the department for rectification. Citing legal precedents such as the Sahara India TV case, the appellant contended that in the absence of malafide intent, errors in payment should be rectified without imposing penalties. The Tribunal agreed with this argument, emphasizing that the appellant had taken steps to correct the error and that the revenue should have rectified the mistake instead of issuing a show cause notice.

Issue 3: System Fault and Tribunal's Decision
The Tribunal noted that the mistake in payment was not solely the appellant's fault but also a system error, as the old registration number had been surrendered and accepted by the department. Referring to previous cases and a trade notice from the Cochin Commissionerate, the Tribunal concluded that the appellant's inadvertent error should not result in the demand for duty, interest, and penalty. The Tribunal set aside the impugned order, allowing the appeal and directing the revenue to make necessary corrections in their records.

This summary provides a detailed overview of the judgment, highlighting the key issues and the Tribunal's reasoning behind setting aside the demand for duty, interest, and penalty in the case.