Modvat credit debit in RG 23A Part II recognised as compliance with pre-deposit direction, defeating contempt.

A debit entry in RG 23A Part II can satisfy a direction to deposit 50% of duty in cash where the entry operates as payment through available Modvat credit. The Karnataka HC accepted that utilisation of Modvat credit toward duty liability is a recognised mode of compliance with a pre-deposit order, and on that basis found no wilful disobedience. As compliance was established, the contempt allegation failed and the contempt petition was not sustained.

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Issues: Whether debit of the amount in RG 23A Part II amounts to compliance with the direction to deposit 50% of the duty amount in cash, and whether the respondent was guilty of contempt for wilful disobedience.

Analysis: The direction required deposit of 50% of the amount, and the respondent showed payment by debiting the amount in RG 23A Part II. The Court accepted the principle that available Modvat credit can be utilised towards duty liability and that such debit entry is a recognised mode of payment in compliance with a pre-deposit direction. On that basis, the Court found no wilful disobedience.

Conclusion: The debit entry in RG 23A Part II was held to be compliance with the pre-deposit order, and the contempt allegation failed.

Final Conclusion: The contempt petition was not sustained, as the Court found compliance with its earlier directions and no wilful contempt.

Ratio Decidendi: A pre-deposit direction may be satisfied by a debit entry in RG 23A Part II where such debit operates as payment of duty, and in the absence of wilful disobedience no contempt lies.

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