- (1.)In this appeal under Section 35G of the Central Excise Act, 1944 (hereinafter referred to as 'the Act')/the appellant-Commissioner of Central Excise and Customs has challenged the order dated 19th September, 2005 passed by the Customs, Excise and Service Tax Appellate Tribunal, Mumbai (hereinafter referred to as 'the Tribunal') in Appeal No. E/1/2005. While admitting the appeal, this court had, by an order dated 23rd June, 2009 framed the following substantial question of law:-
1. Whether an assessee can avail the facility of making the payment from his deemed creditor account in spite of specific rule to make the payment through account current (PLA) when he defaults in making these fortnightly payment and forfeited the facility of payment of duty on fortnightly basis and whether the judgment of Hon'ble High Court of Bombay in the case of Lloyds Steel Industries Limited v. Union of India, 2005 183 ELT 351 can be made applicable after considering the facts and circumstances of the present case or otherwise?

The respondent assessee, an independent textile processor, was engaged in the manufacture of excisable goods namely, MMF (Processed) falling under Chapter 54 of the Schedule to the Central Excise Tariff Act, 1985. The assessee had been availing the facility of payment of duty on fortnightly basis in terms of the procedure laid down in Rule 8 of Central Excise Rules, 2002 (hereinafter referred to as 'the Rules'). It appears that the assessee had defaulted several times during the financial year; however, it had paid the default amount of central excise duty along with interest under Rule 8(3) of the Rules. By an order dated 28th June, 2002 of the Deputy Commissioner, Central Excise, the facility of installment payment came to be forfeited for a period of two months starting from the date of communication of the order and till such date on which all the dues were paid. Accordingly, the assessee was restrained from availing of the benefit of fortnightly/monthly basis scheme for a period of two months and was directed to clear the goods on payment of duty consignment-wise from the PLA only for the said period. It appears that despite the aforesaid order withdrawing the facility of payment by way of installment, the assessee paid duty from its deemed credit account.

(2.)A show-cause notice dated 26th June, 2003 came to be issued to the assessee alleging that in terms of Rule 8 of the said rules, the defaulter was required to pay duty from account current (PLA) and not from deemed credit and in the event of any such failure, the clearances would be deemed to have been made without payment of duty and the consequences for penalty under the Central Excise Rules, 1944 would follow. The assessee was, accordingly, called upon to show cause as to why duty to the tune of Rs. 9,11,772/- under Rule 8 of the Rules and Section 11A of the Act, interest at the rate of 24% per annum under Rule 8(3) and penalty under Rule 25 of the Rules should not be imposed. The adjudicating authority by an order dated 16th February, 2004 held that the assessee was liable to pay Central Excise duty amounting to Rs. 9,11,772/- and further imposed penalty of Rs. 9,11,772/- on the assessee under Rule 25 of Rules. Being aggrieved, the assessee carried the matter in appeal before the Commissioner (Appeals) who, by an order dated 21st September, 2004, held that as the assessee had forfeited the facility of monthly payment of duty in terms of Rule 8 of the Rules, it was obliged to pay the entire amount of duty from its PLA (Account Current) during the said period. The Commissioner (Appeals) further found that the assessee having failed to comply with the provisions of Rule 8, it was liable to pay interest under Rule 8(3) of the Rules. Before the Commissioner, it was contended that if the assessee was required to make payment of duty from the PLA, they should be allowed to take re-credit of the amount paid as duty from their deemed credit account. The said request of the assessee was accepted and it was permitted to take re-credit of the amount of Rs. 9,11,772/- from its deemed credit account. It was also contended on behalf of the assessee that there was no intention to evade payment of duty and as such, there was no reason to impose penalty under Rule 25 of the Rules. The Commissioner (Appeals) was of the view that there is no requirement of mala fide intention for imposition of penalty under Rule 25(1)(a) of the Rules and accordingly held that the assessee was liable to pay penalty under Rule 25 for contravention of Rule 8 of the Rules. The assessee carried the matter in second appeal before the Tribunal.
(3.)The Tribunal, by the impugned order, set aside the order of Commissioner (Appeals) by placing reliance upon the decision of the Bombay High Court in the case of Lloyds Steel Industries Limited v. Union of India, 2005 183 ELT 351 and allowed the appeal.