Whether the Penalty should be imposed in case of non filing of ER-1 Return by assessee working under Compound levy scheme?

PJ/Case Laws/2011-12/1130

Prepared by
CA Rajani Thanvi
Bharat Rathore

Case:Commr. of C.Ex., Allahabad Vs Bajrang Aluminium Indus. Ltd.

Citation:2011(266) E.L.T. 65 (Tri. Del.)

Issue: Whether the Penalty should be imposed in case of non filing of ER-1 Return by assessee working under Compound levy scheme?

Brief Facts: The Respondent are manufacturing Aluminium circles and availed compounded levy scheme with an option to pay the duty of excise on the basis of number of cold rolling machines installed for the purpose of said goods and respondent was liable to observe the procedure laid down under notification no. 34/01-CE., The respondent did not file ER-1 returns. Accordingly, a show cause notice was issued proposing penalty under Rule 27 ibid. Thereafter for contravention of 75 months, a penalty of Rs. 5,000/- for each default was imposed on the respondents. The respondent filed appeal before the Commissioner (Appeals) who reduced the penalty from Rs. 375,000/- to Rs. 2000/- only. Aggrieved from said order, Revenue is file appeal before CESTAT.

Appellant’s Contention: The appellant submit that the respondents had not followed the provisions of rule 12 by not filing ER-1 return in time. Hence, the respondents are liable to pay penalty prescribed under Rule 27 ibid is Rs. 5000/- for each default. The respondent is liable to pay the penalty of Rs. 375000/- as imposed by the adjudicating authority.

Respondent’s contention:-The respondent submit that it is not disputed that they has paid the duty in time, intimated the department in time and follow up the procedure with are applicable for compounded levy of duty scheme, they have not filed ER-1 return in time this the only mistake committed by them. This is a procedural lapse under bona file belief. The respondent further submit that Commissioner (appeals) has rightly reduced the penalty to Rs. 2000/-. Hence, the impugned order is to be upheld.

Reasoning of Judgment: - The Hon’ble Tribunal heard both side and considered that the impugned order wherein Commissioner (Appeals) has relied on the decision of Larger Bench of the Tribunal in the case of Mohinder Steel Ltd. V. CCE reported in [2002 (145) E.L.T.290 (Tri. LB)] wherein it was held that applicability of general provisions in Central Excise Act and Rules are excluded in case of compounded levy of duty.

The Hon’ble Tribunal going through the Noficaiton no. 34/2001-CE and Para 1.1 Pt. I of Chapter 12 of the Central Excise manual and observed that the respondent under the bona fide belief that they had discharged the Central Excise liability in terms of the notification no. 34/2001-CE is complete code for filing of returns also and therefore they were not required to file montly ER-1 retrun under Rule 12. they had mistakenly considered that filing of application in Form Appendix II as an act of as if they had filed the return prescribed under Rule 12. The respondents were also filing Appendix II regularly to the department and the payment of duty has also not been disputed by the department. There is only a procedural lapse which also was due to bona fide belief of the appellants that they had filed the requisite return in form of Appendix II.

Judgment:Revenue’s appeal rejected.

Comment:If the procedural lapse with bona fide belief is there than the penalty for such lapse cannot be imposable.

*************

Comments

PJ/Case Laws/2011-12/1130

Post a Comment

Query