2011 (10) TMI 320 - AT - Central Excise

Reduction of penalty by Commissioner(Appeals) - penalty imposed on ground of filing quarterly ER-3 returns instead of monthly ER-I return Held that - Assessee was under bonafide belief that on account of being SSI unit they were not required to file monthly ER-I returns. Lapse on the part of the assessee was technical one. No infirmity in order of the Commissioner (Appeals). - Decided against the Revenue.

Summary

Issues:
Reduction of penalty under Rule 27 of Central Excise Rules from Rs.20,000 to Rs.5,000 based on the belief of filing quarterly ER-3 returns instead of monthly ER-I returns.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi pertains to a dispute regarding the reduction of penalty imposed on the respondents under Rule 27 of the Central Excise Rules. The Commissioner (Appeals) had reduced the penalty from Rs.20,000 to Rs.5,000 based on the reasoning that the respondents had filed ER-3 quarterly returns instead of ER-I monthly returns due to a bonafide belief stemming from their status as a small scale unit. The Commissioner noted that the respondents had foregone their SSI exemption and, therefore, were required to file ER-I monthly returns. However, considering the circumstances and the fact that the respondents had consistently filed ER-3 quarterly returns on time, the Commissioner took a lenient view and reduced the penalty.

The Appellate Tribunal, after hearing the arguments presented by the learned SDR on behalf of the Revenue, observed that the penalty was imposed due to the respondents' failure to file monthly ER-I returns despite filing quarterly ER-3 returns. The Tribunal agreed with the Commissioner's reasoning that the lapse was technical and stemmed from a bonafide belief held by the respondents as a small scale unit. Consequently, the Tribunal found no fault in the impugned order of the Commissioner (Appeals) and noted that since the penalty amount was less than Rs.50,000, the Revenue's appeal against the order could not be appreciated.

In conclusion, the Appellate Tribunal rejected the stay petition and the appeal filed by the Revenue, upholding the decision of the Commissioner (Appeals) to reduce the penalty from Rs.20,000 to Rs.5,000 based on the circumstances surrounding the filing of quarterly ER-3 returns instead of monthly ER-I returns by the respondents.