Excise duty payment by demand draft is treated as paid on bank presentation, avoiding penalty under the thirty-day rule.

Payment of excise duty by cheque or demand draft is treated as made on the date the instrument is presented in the bank. Applying that rule under Rule 8(4) of the Central Excise Rules, the instalment was held to have been discharged within the prescribed thirty-day period, so the penal consequence for delayed payment was not attracted and the reduction of penalty was justified.

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Issues: Whether the penalty imposed for delayed payment of excise duty under Rule 8(4) of the Central Excise Rules, 2001 was justified where the duty was discharged by demand draft within thirty days of the due date, and whether the date of presentation of the demand draft had to be treated as the date of payment.

Analysis: The liability was required to be discharged by 5-1-2003. The balance amount, together with interest, was paid by demand draft dated 4-2-2003 and cleared on 7-2-2003. The relevant question was whether the instalment remained unpaid beyond thirty days from the due date. The accepted legal position is that where duty is paid by cheque or demand draft, the date of presentation of the instrument in the bank is treated as the date of payment. On that basis, the payment was within the statutory period, so the penal consequence under Rule 8(4) was not attracted.

Conclusion: The reduction of penalty was justified, and the Revenue's challenge failed.

Ratio Decidendi: For the purpose of Rule 8(4), payment of duty by cheque or demand draft is treated as made on the date of presentation in the bank, and no penalty follows where the instalment is discharged within the prescribed thirty days.

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