2012 (10) TMI 951 - AT - Central Excise

Penalty - Held that - In terms of the Rule 8(1) of Central Excise Rules, 2002, the electronic payment of central excise duty is mandatory for certain category of assessees and there is no dispute that the appellant s unit falls in that category. There is no dispute that the appellant were required to file ER-I Return electronically. Hence, the failure to pay duty electronically and file return electronically would attract penalty under Rule 27. The Rule 27 however provides for penalty which may extend to Rs. 5,000/-. The penalty of Rs. 5,000/- is maximum penalty prescribed under this Rule. In the circumstances of the case, I am of the view that penalty of Rs. 5,000/- for each offence and each month is excessive. Accordingly, the total penalty is reduced to Rs. 5,000 - Decided partly in favour of assessee.

Issues: Allegation of non-payment of duty and non-filing of ER-1 Return electronically, imposition of penalty, appeal against penalty, waiver of pre-deposit, consideration of genuine reasons for failure, dispute over penalty amount, applicability of Central Excise Rules, reduction of penalty amount.

The judgment in this case involves an allegation against the appellant for not paying duty electronically and failing to file the ER-1 Return electronically, violating the Central Excise Rules. The jurisdictional Superintendent imposed a penalty of Rs. 5,000/- for each offense for each month, totaling Rs. 40,000/-. The Commissioner (Appeals) upheld this penalty. The appellant, a Cooperative Sugar Mill, cited genuine reasons for the failure, seeking leniency in penalty imposition. The Rule 8(1) of Central Excise Rules mandates electronic payment for certain assessees, including the appellant. Rule 27 allows a penalty of up to Rs. 5,000/- for such violations. The Tribunal found the penalty excessive and reduced it to Rs. 5,000/- for each offense, each month, modifying the impugned order and disposing of the stay application.

The primary issue addressed in the judgment was the imposition of penalties on the appellant for non-payment of duty and non-filing of the ER-1 Return electronically, contravening the Central Excise Rules. The appellant argued genuine reasons for the failure, citing the need for permission from their Head Office for electronic transactions. The Tribunal considered Rule 8(1) mandating electronic payment for certain assessees and Rule 27 allowing penalties up to Rs. 5,000/-. The Tribunal found the penalty amount excessive and reduced it to Rs. 5,000/- for each offense, each month, considering the circumstances of the case and the maximum penalty prescribed by the Rule.

Another crucial aspect of the judgment was the consideration of the waiver of pre-deposit and the final disposal of the matter with the consent of both parties. Despite the matter initially listed for a stay application hearing, the Tribunal waived the pre-deposit requirement due to a short issue involved and proceeded with the final disposal of the case. This decision expedited the resolution process and allowed for a comprehensive review of the penalty imposition and reduction.

The Tribunal's analysis focused on the applicability of the Central Excise Rules, particularly Rule 8(1) and Rule 27, in determining the penalty for non-compliance with electronic payment and filing requirements. While acknowledging the appellant's failure to adhere to the electronic mode of transactions, the Tribunal found the original penalty amount excessive and reduced it to the maximum prescribed under Rule 27, i.e., Rs. 5,000/- for each offense, each month. This reduction in penalty amount was based on a thorough review of the case's circumstances and the legal provisions governing such violations.

In conclusion, the judgment highlighted the importance of complying with electronic payment and filing requirements under the Central Excise Rules. It emphasized the need for penalties to be proportionate to the violations committed, considering the maximum penalty prescribed by the relevant Rule. The Tribunal's decision to reduce the penalty amount for the appellant while upholding the violation findings underscored the balance between enforcement and fairness in regulatory compliance matters.

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