Cheque payment credit date and absence of evasion can make central excise penalty unwarranted.

Where duty payment is tendered by cheque and the cheque is later honoured, the date of presentation may be treated as the relevant date for credit in the Government treasury. On the facts noted, the cheque was ultimately encashed, no dishonour occurred, and no intention to evade duty was shown. In those circumstances, penalty under Rule 173Q of the Central Excise Rules, 1944 was held unwarranted and the impugned order was liable to be set aside.

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Issues: Whether penalty was sustainable where credit in the PLA was taken on presentation of cheque before its realization, though the cheque was later encashed and no dishonour occurred.

Analysis: The appeals concerned a short gap between presentation of cheque and actual credit into the Government treasury. The amount covered by the cheque was ultimately received by the Revenue, and no cheque was dishonoured. In these circumstances, the relevant date for taking credit was the date of presentation of the cheque. The record also showed no intention to evade duty, making penal action unwarranted.

Conclusion: Penalty under Rule 173Q of the Central Excise Rules, 1944 was not justified and the impugned order was liable to be set aside.

Ratio Decidendi: Where a cheque tendered for payment of duty is subsequently honoured and credited to the Government treasury, the date of presentation of the cheque may be treated as the relevant date for credit, and penalty is not warranted absent any intention to evade duty.

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