Vidyut Corporation Vs C.C.E. & S.T.-Daman (CESTAT Ahmedabad)
Introduction: The recent ruling by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Ahmedabad in the case of Vidyut Corporation vs. C.C.E. & S.T.-Daman addresses a crucial matter involving excise duty demands, interest, and penalties. The core issue revolves around a clerical error in mentioning the wrong registration number during the payment process.
Detailed Analysis: Vidyut Corporation, having undergone a change in its registration due to unforeseen circumstances, inadvertently paid excise duty under the wrong registration code. Despite the appellant’s proactive approach in notifying the error and seeking rectification, a show cause notice was issued, leading to a demand for Rs. 98,40,743 and a penalty of Rs. 50 Lacs.
The appellant’s counsel argued that, given the admitted fact of depositing the demand under the wrong registration, and considering the inadvertent nature of the mistake, demanding duty twice was unjust. Drawing parallels with the precedent set by the Sahara India TV case, the appellant emphasized the absence of malafide intent and the efforts made for rectification.
The Tribunal, in its careful consideration of the case, acknowledged the sole mistake made by the appellant in mentioning the wrong registration while paying excise duty. It highlighted that there was no case of non-payment of duty, making the demand unsustainable. The Tribunal also noted the appellant’s bona fide view that the department had rectified the mistake and emphasized the system fault wherein the old registration number, already surrendered, was still accepted for payment.
Referring to the Sahara case once again, the Tribunal found a similar situation and ruled that such mistakes could be rectified. It stressed that penalizing the appellant in the absence of mala fide was unwarranted. The Tribunal also cited a Cochin Commissionerate Trade Notice, providing a procedure for rectification of such mistakes without additional penalties.
Conclusion: The CESTAT Ahmedabad’s order in the Vidyut Corporation case serves as a precedent emphasizing the need for a pragmatic approach in excise duty matters. The ruling underscores that a mere clerical error, promptly notified, should not lead to the imposition of additional duties, interest, or penalties. This decision aligns with principles of fairness and rectifiability, ensuring that inadvertent mistakes are treated with a reasonable and just perspective. The Tribunal’s directive to allow necessary corrections in the records provides a practical solution, ensuring a fair outcome for all parties involved.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the case are that the appellant was granted registration Certificate No AAAFV7328JXM001 dated 27.02.2003 under provision of Rule 9 read with Notification No. 35/2001-CE (NT) dated 26.06.2001. The said registration was surrendered on 24.03.2004 to the Deputy Commissioner of Central Excise Division North Daman as the unit at Survey No 481/3B Somnath, Dabhel, Nani Daman was devastated by fire. The appellant requested deputy Commissioner to accept surrender of registration thereafter the appellant was granted another registration certificate No AAAFV328JXM002 on 26.03.2008 for manufacturing the excisable goods in the premises Survey No 482/15 Somnath, Dabhel, Daman. After obtaining new registration, the new unit opened at Survey No. 482/15 Daman. They started business of the same electrical goods as so done in the first survey no 481/3B. During the period 05.03.2011 to 05.09.2011, the appellant inadvertently paid the duty on clearances of the goods under assesse code No. AAAFV328JXM001. The appellant vide letter dated 08.11.2011 made a request to the Jurisdictional Assistant Commissioner for changing Central Excise Registration No. in the payment made under wrong (previous assesse code) assesse code in Form ER-1 against those payments the correct registration no. and address has been clearly mentioned. The appellant thereafter received an email dated 05.01.2012 from the departmental Superintendent, IC EASIEST DGS SZ Chennai informing that although when the manual payments were being made it was possible to rectify any errors manually. However, with electronic filing, such corrections were not possible manually. Thereafter, a show cause notice dated 07.03.2012 was issued to the appellant demanding duty of Rs. 98,40,743/- which stands paid by the appellant against the previous registration number. The Adjudicating Authority in the impugned order in original confirmed the demand interest and also imposed penalty of Rs. 50 Lacs under Rule 25 of the Central Excise Rules, 2002. Therefore, the present appeal filed by the appellant.
2. Shri B. K Singh, Learned Counsel along with Ms. Vandana Singh appearing for the Appellant submits that in any case even show cause notice ought not to have been issued as it is admitted fact that the appellant have deposited the demand even though under wrong registration number which was otherwise surrendered and the same was accepted by the department. For small inadvertent mistake the duty cannot be demanded twice. He submits that the appellant after committing such mistake approached the department for rectification of error, the department has issued a show cause notice and confirmed the demand.
2.1 He submits that on the identical fact this Tribunal in the case of Sahara India TV – 2016 (1) STR 155 (Tri. Del) clearly held that in absence of any malafide when mistake was brought to the to the department by the appellant, there has not been any short or delayed payment of service tax and the Tribunal has directed the revenue to rectify the mistake and set aside penalty and interest. He also placed reliance on the following judgments:-
