2004 (2) TMI 453 - AT - Central Excise

Tribunal overturns penalty for late duty payment due to clerical error

The Tribunal ruled in favor of the appellant, setting aside the penalty imposed for late payment of duty due to a clerical error in the cheque amount. The ... Penalty - Payment of duty under compounded levy scheme by cheque Issues: Imposition of penalty under Rule 96ZQ(5) of the Central Excise Rules, 1944 for late payment of duty due to a clerical error in a cheque.Analysis:1. Late Payment Penalty: The appellant, engaged in processing man-made fabrics liable for Central Excise duty, appealed against a penalty of Rs. 12.5 lakhs under Rule 96ZQ(5) for a clerical error in a cheque payment. The appellant issued a cheque for the duty amount on 29-8-2000, but due to a clerical error in writing the amount in words, the cheque was returned by the bank. The duty was then paid in cash on 1-9-2000 with interest for the delay. The appellant argued that the penalty was not justified due to a genuine clerical mistake, citing precedents where penalties were set aside for similar reasons.2. Appellant's Argument: The appellant contended that the clerical error in writing the cheque amount was unintentional and that they had sufficient funds in their account. They referenced judgments where penalties were overturned for similar errors, arguing that the penalty under Rule 96ZQ(5) was not warranted. The appellant highlighted that the delay was only for one day and that the duty was paid promptly after realizing the mistake.3. Revenue's Argument: The Revenue argued that as per Rule 96ZQ(5), failure to pay duty by the specified date attracts a penalty equal to the duty amount. They emphasized that the duty was not paid on time, justifying the imposition of the penalty. The Revenue also contended that the decision in the Beauty Dyers case was not applicable outside the territorial jurisdiction of the Madras High Court, citing a precedent where judgments from one High Court were not binding on others.4. Tribunal's Decision: The Tribunal considered both arguments and focused on the factual aspect of the case. Acknowledging the clerical error in the cheque amount, the Tribunal noted that the duty was paid promptly after the mistake was realized, with only a one-day delay. The Tribunal observed that clerical mistakes are common and, in this case, did not warrant a penalty, as it was not a deliberate evasion of duty. Relying on these factors, the Tribunal set aside the penalty imposed on the appellant, emphasizing that the circumstances did not justify the penalty under Rule 96ZQ(5).In conclusion, the Tribunal ruled in favor of the appellant, setting aside the penalty imposed for the late payment of duty due to a clerical error in the cheque amount, highlighting the prompt rectification of the mistake and the absence of intentional evasion of duty.