2016 (1) TMI 389 - HC - Central Excise

Adjustment of Payment of duty under the wrong code - Petition has used wrong registration number in the challan wrongly - The petitioner immediately thereupon pointed out this issue to the Audit Officer under letter dated 19.03.2015 in detail explaining he background leading to such mistake. On 05.05.2015, the Department wrote to the petitioner that the assessee code now cannot be changed and only remedy available to the petitioner would be to seek refund. - t was conveyed to the petitioner that the duty paid in the wrong assessee code cannot be treated as payment of excise duty for the month of July 2014 and the assessee should therefore make payment of the said amount again. Any delay would invite interest and penalty. Held that - whatever be the accounting difficulty, when undisputed fact is that the petitioner did pay a certain excise duty, merely mentioning wrong code in the process, cannot result into such harsh consequence of the entire payment not being recognized as valid, incurring further liability of repayment of the basic duty with interest and penalties. Such amount was deposited by the petitioner with the Government of India and it was duly credited in the Government account. It is not even the case of the respondents that the petitioner had any other code by the number and for which there was separate manufacturing activity inviting separate duty liability. Indisputably, thus, the petitioner had singular duty liability for which the actual payment was also made. Under the circumstances, the impugned communication dated 05.05.2015 and notice dated 21.07.2015 are quashed. The respondents are directed to give credit of the duty paid by the petitioner Decided in favor of assessee.

Summary

Issues:
Challenge to communication dated 05.05.2015 and notice dated 21.07.2015 regarding excise duty payment discrepancy.

Analysis:
The petitioner, a Private Limited company engaged in manufacturing excisable goods, filed returns under Code No. AADCD7232REM002. In August 2014, the petitioner paid duty of Rs. 22,15,000 using the wrong assessee code AADCD7232REM001. The Department refused to change the code and advised seeking a refund, treating the payment as invalid. A subsequent notice demanded payment again with penalties. The petitioner challenged these in court.

The court noted that the petitioner paid the duty amount, albeit with the wrong code. The Department acknowledged receiving the duty but refused to credit it due to an accounting issue. The Department insisted on recovery despite the actual payment made by the petitioner.

The court held that the mere error in mentioning the code should not lead to the harsh consequence of non-recognition of payment, imposing additional liabilities. The duty amount was deposited and credited to the Government account. As there was no separate duty liability under the wrong code, the petitioner's payment should be recognized. The court quashed the communication and notice, directing the Department to credit the Rs. 22.15 lacs paid by the petitioner. Any remaining unpaid amount could be pursued by the Department legally.

In conclusion, the court disposed of the petition in favor of the petitioner, emphasizing the validity of the duty payment made despite the code error.