2011 (1) TMI 1079 - AT - Central Excise

Interest liability for delay in payment of duty - connectivity problem in the OLTAS system in RBI/NSDL package system and hence they could not transmit the e-payment on 31-3-2008 - Held that - As delay of two days in remitting the duty in the Government account this delay is not due to any violation or error on the part of the assessee but is due to systems failure. The certificate issued by the bank is not disputed by the Revenue authorities order is set aside and the appeal is allowed.

Summary

Issues:
1. Delay in payment of duty for the month of March 2008 by two days.
2. Liability to pay interest for the delay in payment of duty.
3. Interpretation of rules regarding exceptions for delayed payment in specific circumstances.

Analysis:
The appeal was filed against the Order-in-Appeal passed by the Commissioner of Central Excise, Mangalore, confirming the demand of interest for a delay in payment of duty for March 2008. The appellant, a manufacturer of labelled beedies, paid the duty electronically on 2-4-2008 instead of the due date of 31-3-2008, resulting in a delay of two days. The issue revolved around whether interest was liable to be paid for this delay, as per Rule 8 of the Central Excise Rules, 2002.

The appellant's representative highlighted that a connectivity issue in the bank's system caused the delay in transmitting the e-payment on 31-3-2008, which was rectified, and the payment was made on 2-4-2008. The Commissioner (Appeals) upheld the Order-in-Original, stating that no exception existed in the rule for such circumstances, and the appellant should have produced a cheque to avail any exception available. However, the delay was due to system failure, not the appellant's error.

The Tribunal noted that the delay was not caused by the appellant but by a systems failure, supported by a letter from the bank confirming the technical issue. The Commissioner's decision to uphold the demand for interest was deemed unsustainable. The judgment emphasized that rules should be interpreted based on their wording, and in the absence of an exception for situations like the appellant's, the interest was not justified. The impugned order was set aside, and the appeal was allowed, ruling in favor of the appellant.