Customs, Excise and Gold Tribunal - Bangalore
Sarvotham Care Ltd. vs Commissioner Of C. Ex. on 3 January, 2003
Equivalent citations: 2003(153)ELT648(TRI-BANG)
ORDER S.S. Sekhon, Member (T)
1. The appellants are registered manufacturers of excisable goods. On scrutiny of R.T. 12 Return pertaining to the period from May, 98 to December, 98, the Range Officer observed that the clearances have been affected without sufficient balance in their personal ledger account and therefore they had contravened the provisions of Rules 9(1), 49(1), 173F and 173G of Central Excise Rules, 1944. Three Show Cause Notices bearing Nos. 1350/98, dated 6-1-98, 1140, dated 2-3-99, and 1166, dated 17-3-99 proposing penalty under Rules 9(2) and 173Q of Central Excise Rules, 1944 and interest under Section 11AB of Central Excise Rules, 1944 were issued.
2. The appellants contested these Show Cause Notices and submitted that they have deposited the amounts in the form of Bankers Cheque and took credit in their PLA account on the same day on which the cheques were presented in the banks along with T.R. 6 Challans as per the Reserve Bank of India Circular No. DGBA. DA. NB. No 1376/GA-26(r) 91/92, dated 18-11-91 and also as per the instructions given by the Commissioner of Central Excise, Hyderabad, in his Trade Notice No. 23/96, dated 4-1-96. These instructions provide that value paid instruments/value received instruments like Bankers cheques/demand drafts, etc., shall be treated on par with cash payment when they are presented with T.R. 6 Challan and the Challan should be released immediately to the tenders by making endorsement "payment received" as in the case of cash payment. Therefore payment through Bankers cheque in the present case should be payment by cash and credit in Reserve Bank of India as excise duty can be utilised.
3. The lower authority did not take into consideration the instructions given by the RBI and the Trade Notice issued by the Commissioner, Hyderabad. The Original Authority relied upon the interpretation that till the transfer is made to the Government account, the payer is not eligible to take credit in his PLA, maintained for payment of Government dues. The Commissioner (Appeals) vide Order-in-Appeal No. 262/2000(H-I)-CE., dated 12-12-2000 found that the TR 6 Challans were returned by the bank to the appellants with the endorsement "Received payment through value paid instrument subject to realisation" and on verification from the Focal Point Bank, it was noticed that the amount involved in the TR 6 Challans were actually realised in the Government account, after a period ranging from one to six days after the above endorsement on the TR 6 Challans. The appellant should therefore not have taken credit, until the same was realised and credited into the Government account. Since the appellants continued to take credits in the PLA on the same day of the receipt of TR 6 Challans with the above endorsement from the bank for a period from May, 98 to December, 98 and started utilising those credits for payment of duties on the clearances without waiting for the actual realisation to the Government accounts took one to six days, the violation of overdrawl of PLA is established as the rules require sufficient balance in the PLA account - current to cover the duty due on the goods intended to be removed and the said entries taken earlier due to the late realisation of the amounts to the Govt. account were not correct. The goods should be considered as removed against the negative balances in the PLA which should be considered as removal of goods without payment of duty and therefore upheld the imposition of penalty of Rs. 2 lakhs under Rules 9(2), 173Q(1)(a) and 173Q(1)(d) of the Act.
4. I find that there is no doubt that the amount as tendered on bankers cheques, which are value paid instruments, the appellant took up the matter with the RBI who vide their letter dated 8 January, 1999 have clarified that the instructions have already been issued to banks to deliver the receipted Challans immediately; if the Challans are accompanied by value received instruments, such as Payment Order/DD/Bankers Cheque which have immediate cash effect, and that they were ascertaining the fact of the case from State Bank of Hyderabad.
5. In view of this clarification, I find that if the realisation of Government accounts have been delayed, it is State Bank of India or the concerned Focal Point Branch which should be blamed and not the appellants, who has followed the instructions of Government of India, Reserve Bank of India and the Commissioner's Trade Notice on the subject and have taken credit on the date on which they have tendered the Bankers Cheque in lieu of cash, along with on TR 6 Challan to State Bank of India branch. I find therefore no reason for visit of penalty on the present appellant before me.
6. A penalty cannot be imposed for no fault of the appellants in this case. The appellant was not in a position to know, by any means, when the Bankers Cheque was realised and money transferred to the Government accounts. Therefore the finding of the lower authority that they should have awaited the realisation of Bankers Cheque has no meaning, since no mechanism exists for the assessee to know as to when the Bankers Cheque is being realised. I find no contributory negligence on the part of the appellants to call for a penalty on them.
7. In view of my findings, I would set aside the penalty and allow the appeal with consequential relief.