Fortnightly excise duty facility can be forfeited for short debit, but the forfeiture period must be proportionate.

Where central excise duty payable for the fortnight was not fully debited by the due date, Rule 8(4) of the Central Excise Rules, 2001 was held applicable to forfeit the facility of fortnightly payment. The Tribunal treated the relevant test as full discharge of duty under the Act, not merely payment of the amount shown in the invoice. It further held that the two-month forfeiture period is not mandatory in every case and must be fixed proportionately to the circumstances. On the facts, the forfeiture was sustained in principle but reduced to one month.

---

---

Issues: Whether the facility to pay central excise duty on a fortnightly basis under Rule 8(1) of the Central Excise Rules, 2001 could be forfeited for two months on the ground of short debit of duty, and if so, whether the period of forfeiture should be maintained or reduced.

Analysis: Rule 8 requires payment of duty in the manner prescribed for the goods removed during each fortnight, and sub-rule (3) applies where the assessee fails to pay the amount of duty by the due date. Sub-rule (4) authorises forfeiture of the facility to pay duty in instalments where the assessee defaults in payment of an instalment in the manner specified. The Tribunal held that the relevant enquiry is whether the duty payable under the Act was fully debited by the due date, and not merely whether the amount shown in the invoice was paid. On the facts, the duty payable was not fully debited, so the consequence under sub-rule (4) was attracted. However, the Tribunal also held that the maximum period of two months is not mandatory in every case and the quantum of forfeiture must be proportionate to the circumstances.

Conclusion: The forfeiture of the facility was upheld in principle, but the period was reduced from two months to one month, in favour of the assessee.

Final Conclusion: The appeal succeeded only to the extent of reducing the period of forfeiture, while sustaining the action of the department that the default attracted Rule 8(4).

Ratio Decidendi: Where the duty payable under the excise law is not fully discharged by the due date, Rule 8(4) can be invoked to forfeit the facility of fortnightly payment, but the period of forfeiture remains discretionary and must be fixed proportionately.

---