2015 (11) TMI 1615 - AT - Central Excise

Tribunal rules in favor of appellant on duty payment timing issue, setting aside duty confirmation order. (3A)

The Tribunal ruled in favor of the appellant, finding that the duty payment was made within the prescribed period despite a delay in transferring the ... Embargo under Rule 8(3A) of the Central Excise Rules, 2002 - application of Rule 8(3) of the Central Excise Rules, 2002 - payment within 30 days from the due date - interest for delayed payment - confirmation of duty demand under Section 11A of the Central Excise Act, 1944Embargo under Rule 8(3A) of the Central Excise Rules, 2002 - application of Rule 8(3) of the Central Excise Rules, 2002 - payment within 30 days from the due date - interest for delayed payment - Whether Rule 8(3A) applies where duty for September 2011 was deposited in the designated bank within 30 days of the due date and interest for the period of delay was paid. - HELD THAT: - The Tribunal held that Rule 8(3A) operates only where duty is discharged beyond the period of 30 days from the due date. In the present case the duty liability for September 2011 was deposited in the designated bank on 18.10.2011 and interest for 13 days' delay was paid. That fact places the transaction within the ambit of sub rule (3) and not sub rule (3A). The subsequent delay in reflecting the deposited amount in the assessee's Current Account due to internal accounting omission did not alter the date of actual payment into the bank, and therefore cannot be a foundation for invoking the embargo in sub rule (3A). The Tribunal relied on the actual date of credit to the bank and the payment of interest as determinative of application of sub rule (3) rather than sub rule (3A). [Paras 5]Rule 8(3A) does not apply; the situation is governed by Rule 8(3).Confirmation of duty demand under Section 11A of the Central Excise Act, 1944 - effect of intra company accounting delay on enforcement action - Whether transferring the amount from the bank account to the Current Account at a later date, owing to an internal accounting error, justifies confirmation of demand under Rule 8(3A) read with Section 11A. - HELD THAT: - The Tribunal found that the assessee had actually deposited the amount in the designated bank on 18.10.2011 and had paid interest for the delayed period. The later transfer into the Current Account due to an error by a dealing assistant was an internal accounting matter and not a failure to pay duty into the designated bank within the prescribed period. Consequently, such an internal delay cannot sustain confirmation of a demand under sub rule (3A) or under Section 11A; the revenue's reliance on the accounting entry date to invoke the harsher provision was rejected. [Paras 5, 6]Internal delay in crediting the Current Account is not a defensible ground to confirm demand under Rule 8(3A) read with Section 11A.Final Conclusion: The impugned order confirming the demand under Rule 8(3A) was set aside and the appeal was allowed, the Tribunal holding that the facts fall under Rule 8(3) since duty was deposited in the designated bank within 30 days and interest for the delayed period was paid. Issues: Application of Rule 8(3A) of the Central Excise Rules, 2002 to the case.Analysis:The appellant, engaged in manufacturing keys and pins, disclosed a duty liability in its ER-1 return for September 2011. The appellant paid a portion of the duty from the Cenvat account and the rest through the Current Account. An amount was deposited in the bank on 18.10.2011, but due to an error, it was not accounted for until 31.12.2011. The Department sought duty confirmation under Rule 8(3A) due to delayed payment and interest paid. The appellant argued that since duty was paid within 30 days of the due date, Rule 8(3A) did not apply. The Tribunal noted that the duty was paid on 18.10.2011 and interest was paid for the delay. The Tribunal found that the situation fell under sub-rule (3) and not sub-rule (3A) of Rule 8, as the duty was paid within the prescribed period. The delay in transferring the amount to the Current Account was not a valid reason for invoking sub-rule (3A), especially considering the interest payment made. The Tribunal set aside the impugned order, ruling in favor of the appellant.