2002 (4) TMI 99 - HC - Central Excise

Summary

Issues:
1. Whether the petitioner-assessee made payment within the stipulated time limit under the "Kar Vivad Samadhan Scheme, 1998"?
2. Whether the petitioner is entitled to the benefit of the scheme despite the payment being made on the 31st day from the date of receipt of the order?

Analysis:
1. The petitioner, engaged in manufacturing and trading, was held liable for Central Excise Duty and penalty due to excess Modvat credit. The petitioner filed a declaration under the "Kar Vivad Samadhan Scheme, 1998" for settlement. The respondents determined the payable amount, and the petitioner made the payment by cheque on 10-2-1999. The cheque was cleared on 13-2-1999, beyond the 30-day limit from the date of order. The respondents denied the scheme's benefit based on this delay.

2. The petitioner argued that the cheque payment should relate back to the date of deposit, making the payment timely. The respondents contended that the payment on the 31st day was beyond the scheme's timeframe. The court analyzed legal precedents stating that cheque payment relates back to the date of delivery, even if encashed later. The Supreme Court and High Courts have consistently held that payment by cheque is valid upon delivery, not encashment. The court applied this doctrine to the present case, ruling in favor of the petitioner.

3. Citing various legal judgments, the court emphasized that payment by cheque is a common practice and should be considered valid upon delivery. The court concluded that the petitioner had discharged their liability by making the payment within the scheme's prescribed time limit. As a result, the court quashed the communications denying the scheme's benefit and directed the respondents to issue the necessary certificate to the petitioner.

In conclusion, the court ruled in favor of the petitioner, holding that the payment made by cheque within the stipulated time limit under the "Kar Vivad Samadhan Scheme, 1998" entitled the petitioner to the scheme's benefits. The court set aside the communications denying the benefit and directed the respondents to issue the required certificate to the petitioner.