Whether monthly ER-1 return is re¬quired to be filed by an assessee operating under the com-pounded levy scheme?

PJ/Case Laws/2012-13/1411

Case:- ZAIDAN METAL ROLLING MILLS PVT. LTD. V.COMMISSIONER OF C. EX., MUMBAI

Citation:- 2012 (284) E.L.T. 661 (Tri. - Mumbai)

Brief Facts:- The appellantmanufacture aluminium circles and operate under compounded levy scheme notified vide Notification No. 17/2007-C.E which prescribes a levy of Rs. 12,000/- per cold rolling machine installed in the appellant's factory premises. They discharge the duty liability. A notice was issued to the appellant proposing imposition of penalty under Rule 27 of the Central Excise Rules, 2002, for contravention of Rule 12(1) of the Central Excise Rules, 2002 on the ground that the appellant did not file the monthly ER-1 returns in the prescribed form within 10 days of the close of the month. For such non-compliance a penalty of Rs. 5,000/- was imposed on the appellant by the jurisdictional Assistant Commissioner, which was appealed against before the lower appellate authority. The lower appellate authority vide the impugned order upheld the imposition of penalty on the ground that Notification No. 17/2007-C.E. exempts the appellant only from the operation of Rule 8 of Central Excise Rules, 2002 and not from Rule 12.

Appellant’s Contention:- The appellant submits that Rule 2(c) of Central Excise Rules, 2002 defines the assessee as under :

"The assessee" means any person who is liable for payment of duty assessed or a producer or manufacturer of excisable goods or a registered person of a private warehouse in which excisable goods are stored and includes an authorised agent of such person. Further, Rule 2(e) of Central Excise Rules, 2002 defines "duty" as: "duty" means the duty payable under Section 3 of the Act.

The appellant also contends that in respect of compounded levy scheme, the excise duty is levied under Section 3A of the Central Excise Act and not under Section 3. Therefore, the provisions of Central Excise Rules, 2002 would apply in respect of duty paid under Section 3 and not in respect of duty paid under Section 3A of the said Central Excise Act. Accordingly, they are not required to file the monthly returns as envisaged under Rule 12 of the Central Excise Rules, 2002. The appellant further submits that under para 4 of the said Notification 17/2007-C.E., the manufacturer operating under the compounded levy scheme has to make a declaration and maintain accounts as provided therein. The manufacturer has to make an application in the prescribed format seeking permission to remove the aluminium circles from his premises during the ensuing month declaring the maximum number of cold rolling machines installed by him or on his behalf in one or more premises at any time during three calendar months immediately preceding the said calendar month in which such application is made. In the case under consideration, the appellant has made such an application and, therefore, the compliance to statutory provisions have been met by the appellants.

Respondent’s Contention:- The Revenue reiterates the findings given by the lower authorities and submits that under Notification No. 17/2007-C.E., the appellant isexempted only from the provisions of Rule 8 of the said Central Excise Rules, and not from the provisions of Rule 12.

Reasoning of judgment: The Tribunalcarefully considered the rival submissions. After hearing the arguments, Tribunalfinds that the appeal itself can be disposed of at this stage.

Rule 12 of the Central Excise Rules, 2002 applies to an 'assessee' and as per the said Rule the assessee has to file monthly return in the prescribed format of the production or removal of the goods and give other particulars within 20 days of the close of the month to which the return relates. The assessee by definition under Rule 2(c) is a person who is liable for payment of duty assessed and 'duty' means duty payable under Section 3 of the Central Excise Act. In the present case the duty payment has been made under Rule 3A of the Act and not under Section 3. Therefore, the provisions of Rule 12 have no application whatsoever and there is no requirement on the part of the appellant to file a monthly return in ER-1 form or in any other form. Notification No. 17/2007-C.E. is a complete code in itself and prescribes the duties and responsibilities that are required tobe discharged by a person operating under the said notification and under the said notification an application has to be filed on a quarterly basis indicating the number of cold rolling machines installed and duty liability required to be discharged and actually discharged. Under compounded levy scheme, this is the statutory return which is required to be filed and not the return under Rule 12 of the Central Excise Rules, 2002. Inasmuch as the appellant has complied with the said procedure, it was held that the appellant has not violated the provisions of Rule 12 of the Central Excise Rule, 2002 and accordingly, the imposition of penalty on the appellant under Rule 27 for violation of Rule 12 is not correct in law.

Decision:- Order is set aside and the appeal is allowed with consequential relief, if any.

Comment:- The gist of this case is that when Rule 12 of Central Excise Rules, 2002 is applicable for assessee’s paying duty under section 3 of the Central Excise Act, 1944 then the assessee’s paying duty under section 3A i.e. under Compound Levy Scheme cannot be covered under the said rule and the provisions as prescribed in the scheme will apply.

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PJ/Case Laws/2012-13/1411

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