2001 (7) TMI 137 - HC - Central Excise

Summary

Issues:
Withdrawal of duty payment facility due to defaults in payment within a financial year.

Analysis:
The petitioner's facility of payment of duty on a fortnightly basis was withdrawn due to defaults in payment for three fortnights within a financial year. The order was challenged before the Commissioner of Customs and Central Excise (Appeals), who upheld the Deputy Commissioner's decision. The key issue is whether the conditions for invoking the power to withdraw the facility under Rule 49 read with Rule 173 (G) of the Central Excise Rules were met at the time of the Deputy Commissioner's order on 29-1-2001.

The alleged defaults by the petitioner were examined based on the dates of cheque presentation and realization. The Deputy Commissioner considered the date of cheque realization as the date of payment, leading to the conclusion of default. However, a precedent case established that the date of cheque receipt should be deemed as the date of payment. Applying this principle, the petitioner's cheques presented before the due dates should be considered timely payments, reducing the defaults to two instead of three as claimed by the authorities.

The government's counsel argued that the petitioner later defaulted a significant amount, but this was disputed by the petitioner's counsel. The court refrained from delving into this subsequent default issue, stating that if proven, it could warrant withdrawal of the facility under the relevant rules. The judgment allowed the writ petition, quashing the impugned order, without imposing any costs. The court kept the question of subsequent defaults open for future consideration, emphasizing the authorities' right to act in accordance with the law.

In conclusion, the court's decision was in favor of the petitioner, highlighting the importance of timely payment and the correct interpretation of payment dates in determining defaults. The judgment clarified the legal principles governing the withdrawal of duty payment facilities and left room for addressing any subsequent defaults in line with the applicable rules.