2019 (6) TMI 1607 - AT - Central Excise

Levy of penalty - failure to file monthly return - appellants have accepted the default, but have pleaded that the same was unintentional and prayed for setting aside the penalty - HELD THAT - The proceedings were initiated for failure to file ER-6 monthly return for the period 2012-13, 2013-14 2014-15. The appellants were required to submit, within ten days from the close of each month, a monthly return in the Form specified by a Notification in respect of the information regarding the receipt and consumption of each principal inputs with reference to the quantity of final products manufactured by them to the Range Superintendent. This requirement was notified by Notification No.41/2004-CE (NT) dated 25.11.2004. Simultaneously, Notification No.39/04-CE (NT) dated 25.11.2004 was also issued, which extended the exemption from filing such return to the assessee, whose payment of excise duty through account current during preceding financial year, was less than ₹ 1.00 Crore. Subsequently, the expression through account current was omitted by Notification No.41/2008-CE (NT) dated 29.09.2008 - This Notification escaped the attention of the assessee, which resulted in failure to file ER-6 return upto March, 2016. The appellants have accepted the default, but have pleaded that the same was unintentional and there has not been any loss of revenue to the exchequer and accordingly, prayed for setting aside the penalties imposed. A lenient view can be taken and quantum of penalty can be reduced to meet the ends of justice and accordingly, the quantum of penalty reduced to ₹ 500/- per return for non-filing of each such return. The total amount of penalty would be ₹ 500/- X 36 ER-6 Returns under Rule 15A of Cenvat Credit Rules, 2004. Appeal allowed in part.

Summary

Issues: Failure to file ER-6 Monthly Returns, Penalty Imposed, Bonafide Belief Contention, Revenue Loss

Failure to file ER-6 Monthly Returns:
The case involved the appellant, a Private Limited Company engaged in manufacturing motor vehicle parts, failing to file ER-6 Monthly Returns for the period 2012-2015. The requirement to file these returns was specified by Notification No.41/2004-CE (NT) dated 25.11.2004. An exemption from filing was initially granted to assesses with excise duty payments through account current below ?1.00 Crore, but this exemption was later omitted by Notification No.41/2008-CE (NT) dated 29.09.2008. The appellant's failure to file these returns until March 2016 led to a show-cause notice and imposition of penalties under Rule 15A of Cenvat Credit Rules, 2004.

Penalty Imposed:
The Adjudicating Authority imposed a penalty of ?5,000 per return for the non-filing of each ER-6 Monthly Return, totaling ?1,80,000 (?5000 x 36 returns). On appeal, the Commissioner (Appeals) accepted the appellant's contention of bonafide belief and reduced the penalty by 50%, considering the default as unintentional and not resulting in any revenue loss. The appellant further appealed to the Tribunal seeking a reduction in the penalty amount.

Bonafide Belief Contention:
The appellant argued that they maintained proper accounting and statutory records, including Raw Material Register and Daily Stock Account, and believed there was an exemption from filing ER-6 returns under Notification No.39/2004-CE (NT) as long as duty paid through PLA did not exceed ?1.00 Crore. They contended that filing ER-6 returns was merely a procedural compliance with no revenue implications, requesting a token penalty to serve the ends of justice.

Revenue Loss:
The appellant demonstrated a bonafide belief in the exemption from filing ER-6 returns based on their understanding of the relevant notifications. They had been diligent in filing other required returns, such as ER-1 and ER-5, and argued that the failure to file ER-6 returns was unintentional and did not result in any revenue loss to the exchequer. The Tribunal, after considering the submissions from both sides, modified the penalty to ?500 per return, totaling ?18,000 (?500 x 36 returns), under Rule 15A of Cenvat Credit Rules, 2004, acknowledging the unintentional nature of the default and reducing the penalty amount in the interest of justice.