Whether payment of duty into wrong Excise code can be treated as non-payment of duty?

PJ/CASE LAW/2016-17/3080

Case-DEVANG PAPER MILLS PVT. LTD. Versus UNION OF INDIA

Citation-2016 (41) S.T.R. 418 (Guj.)

Brief Facts-The petitioner has prayed for setting aside the communication dated 5-5-2015 as at Annexure-A to the petitioner as well as notice dated 21-7-2015 as at Annexure-M to the petition. Brief facts are as under: -
The petitioner is a private limited company and is engaged in the manufacture of excisable goods for which the petitioner enjoys central excise registration. Petitioner has been allotted Code No. AADCD7232REM002. It is under this code that the petitioner regularly files its returns. In the month of August, 2014, the petitioner has incurred duty liability of Rs. 22,15,000/-, which liability the petitioner discharged in cash through personal ledger account. While paying such duty, the ‘challan’ under which the amount is deposited in the bank, the petitioner, due to oversight, mentioned the assessee Code No.AADCD7232REM001 instead of Code No. AADCD7232REM002. The petitioner immediately thereupon pointed out this issue to the Audit Officer under letter dated 19-3-2015 in detail explaining the background leading to such mistake. On 5-5-2015, the Department wrote to the petitioner that the assessee code now cannot be changed and only remedy available to the petitioner would be to seek refund. It was conveyed to the petitioner that the duty paid in the wrong assessee code cannot be treated as payment of excise duty for the month of July, 2014 and the assessee should therefore make payment of the said amount again. Any delay would invite interest and penalty.

Respondents Contention-Counsel Shri Oza for the Department however submitted that the Accounting Division would not reverse the amount and credit into the account of the assessee. It was therefore treated as non-payment of the duty and issued notice for recovery with penalty.

Reasoning Of Judgement-Whatever be the accounting difficulty, when undisputed fact is that the petitioner did pay a certain excise duty, merely mentioning wrong code in the process, cannot result into such harsh consequence of the entire payment not being recognized as valid, incurring further liability of repayment of the basic duty with interest and penalties. Such amount was deposited by the petitioner with the Government of India and it was duly credited in the Government account. It is not even the case of the respondents that the petitioner had any other code by the number AADCD7232REM001 and for which there was separate manufacturing activity inviting separate duty liability. Indisputably, thus, the petitioner had singular duty liability for which the actual payment was also made. Under the circumstances, the impugned communication dated 5-5-2015 and notice dated 21-7-2015 are quashed. The respondents are directed to give credit of the duty paid by the petitioner for a sum of Rs. 22.15 lacs by making necessary accounting entries on the basis that the same was paid at the relevant time. If thereafter any sum remains unpaid, it would be open for the Department to take further action in accordance with law. The petition is disposed of in the above terms.

Decision-Petition disposed of

Comment-The gist of the case is that payment of duty into wrong Excise code cannot result into harsh consequence of entire payment not being recognized as valid, incurring further liability of repayment of basic duty with interest and penalties. And, as the amount is already deposited and credited in Government account it could not be treated as nonpayment of duty.
Prepared By-Neelam Jain

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PJ/CASE LAW/2016-17/3080

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