2017 (7) TMI 24 - HC - Central Excise

The duty is said to have been paid under incorrect assessee code, which resulted into issuance of communications and orders - demand - Held that - when authorities stand became very clear from the communication at page-102 and reply that there exists no demand of duty or any sum payable from the petitioners so far as assessee code No. 001 is concerned and when the authority has also knowledge that there was a mistaken payment made under challan, which contained incorrect code i.e. Code no. 001, though it belonged to present assessee, who also has Code No. 002 also and who unequivocally intended to make payment demand, which was payable to him and which was paid, though mistakenly under wrong code i.e. Code no. 001, could not have been subjected to technical defect on the part of authority, so as to saddle with liability - this is a case of issuing appropriate mandamus for calling upon the authorities to treat the payment of ₹ 5,10,573/- against Code No. 002 from the date on which, it was paid resulting into exempting the petitioners from any coercive liability of so called non-payment against Code No. 002 - demand set aside - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge of demand of duty due to payment under incorrect assessee code.

Analysis:
The petitioners, a Private Limited Company and its Managing Director, approached the Court under Article 226 challenging the demand of duty due to a payment made under an incorrect assessee code. The controversy revolved around a mistakenly mentioned assessee code number and payment made thereunder, leading to authorities refusing to treat it as paid under the correct code. The matter was considered narrow, and the Court proceeded with the final hearing with the consent of both parties. The petition sought various writs to quash and set aside letters issued by the Superintendent, Central Excise, Range IV, Division IV, Bharuch, along with other communications. The crux of the challenge was the demand of duty despite timely payment, albeit under the wrong assessee code, resulting in the impugned communications and orders.

The facts revealed that the petitioners were initially allotted a specific assessee code, surrendered it due to turnover reasons, and were subsequently granted a new code. However, a Central Excise duty payment of ?5,10,573 was mistakenly made under the old, non-functional code instead of the current one. Despite the petitioners' requests to transfer the payment to the correct code, authorities demanded repayment with interest and penalty. The respondents contended that there was no provision for such transfer and directed the petitioners to pay the duty amount under the correct code and claim a refund for the erroneous submission.

The Court, after considering the arguments and documents, noted that the authorities were aware of the mistake in the assessee code used for payment. The Court emphasized that the duty was paid in time, albeit under the wrong code, and that the authorities should not have imposed liability due to a technical defect. Referring to relevant judgments, the Court held that the petitioners should be exempted from coercive liability for the so-called non-payment against the correct code. Consequently, all impugned communications and orders were quashed and set aside, and the petition was allowed. The Court issued a mandamus directing the authorities to treat the payment against the correct code from the date it was made. The ruling was made absolute without any costs awarded.