2003 (12) TMI 259 - AT - Central Excise

Summary

Issues:
1. Duty payment adjustment and penalty imposition under Central Excise Rules, 1944.
2. Compliance with Rule 173G regarding maintenance of PLA.
3. Allegation of short debiting of duties and clearance without payment.

Analysis:

1. The case involved a Government undertaking dealing with petroleum products. They mistakenly paid Excise Duty on certain products supplied to a factory, which were actually exempted from duty. The appellants later adjusted this amount against subsequent clearances but were issued a show cause notice for recovery of the duty and penalty imposition under Rule 9(2) of the Central Excise Rules, 1944. The Commissioner upheld the duty demand and imposed a penalty of Rs. 1,00,000 under Rule 173Q, citing violation of Rule 9(1) and non-compliance with the correct procedure for duty adjustment.

2. The issue of compliance with Rule 173G regarding the maintenance of PLA (Personal Ledger Account) was raised. The rule required the assessee to cancel invoices and inform the proper officer to take credit of the duty in the account. The appellants had sent an intimation about canceling the invoices, but the authorities did not consider this in their decision-making process. The failure to properly address this aspect led to an incorrect conclusion by the lower authorities.

3. The allegation of short debiting of duties and clearance without payment was examined. The inspection of the PLA revealed discrepancies in duty debits and actual payments on specific dates for different petroleum products. However, it was found that the appellants had canceled the invoices and issued new ones, indicating compliance with the rules. The failure to re-credit the debited amount in the PLA led to the incorrect demand for duty payment. The penalty imposed under Rule 173Q was reduced from Rs. 1,00,000 to Rs. 5,000, as there was no evidence of an intention to evade duty payment.

In conclusion, the appeal was partly allowed by reducing the penalty and setting aside the duty demands based on the findings related to compliance with the Central Excise Rules and the incorrect assessment of duty payment adjustments.