2012 (8) TMI 376 - AT - Central Excise

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 Held that - discharge of duty liability under compounded levy scheme - Duty payment has been made under Rule 3A of the Act and not under Section 3 - 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 - appellant has complied with the said procedure - 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 - appeal is allowed

Summary

Issues:
1. Condonation of delay in filing appeal.
2. Requirement of monthly ER-1 return for an assessee under compounded levy scheme.

Condonation of Delay:
The appeal, COD, and stay application were filed against an order-in-appeal passed by the Commissioner of Central Excise & Customs. The delay of 12 days was due to the appellant's sickness, and the application for condonation of delay was allowed after considering the reasons provided by the appellant.

Monthly ER-1 Return Requirement:
The main issue was whether a monthly ER-1 return is necessary for an assessee under a compounded levy scheme. The appellant, a manufacturer operating under the compounded levy scheme, was penalized for not filing monthly ER-1 returns as required by Rule 12 of the Central Excise Rules, 2002. The appellant contended that as per the scheme, duty is levied under Section 3A, not Section 3, making Rule 12 inapplicable. The appellant complied with the scheme's requirements by making the necessary declarations and applications, which were deemed sufficient statutory compliance.

The Revenue argued that the appellant was only exempted from Rule 8, not Rule 12, under Notification 17/07-CE. However, the tribunal found that Rule 12 applies to an "assessee" liable for duty under Section 3, whereas the duty in this case was paid under Section 3A. Therefore, the provisions of Rule 12 did not apply to the appellant. The tribunal held that the appellant's compliance with the compounded levy scheme's requirements sufficed, and the penalty imposed for non-compliance with Rule 12 was incorrect in law. Consequently, the penalty was set aside, and the appeal was allowed with any consequential relief.

This judgment clarifies the distinction between duty payment under different sections of the Central Excise Act and emphasizes the importance of complying with specific statutory requirements under schemes like the compounded levy scheme to avoid penalties for non-compliance with irrelevant rules.