2016 (7) TMI 82 - AT - Central Excise

Penalty imposed on the misc. provisions of Rule 27 of CER 2002 and Rule 15 (A) of CCR 2004 - manual filing of returns and accepted by the department - Held that - The appellant has a valid point in their argument that the department has been accepting their manual returns and after 5 years issued notice for imposing penalties for not filing returns by electronic mode While electronic filing will facilitate easy monitoring and proper record keeping it was expected when the scheme was introduced the assessee be guided by the Department for complying with the new requirement. The appellants have been filing manual returns. It is an admitted fact that the main monthly returns used for assessment has been filed by them electronically. Further when the scheme of E-filing was introduced in respect of other returns in 2011/2012 no penalty can be imposed for the period prior to that for cases to failure to file electronically. Also take note that no irregularity or short payment of duty is connected to any of these returns. Considering the above factual and legal position find that while there is an admitted violation on the part of the appellant regarding mode of filing these returns it will be proper and justifiable to restrict the penalties to 5, 000/- each in terms of Rule 27 of Central Excise Rules 2002 and Rule 15(A) of Cenvat Credit Rules 2004. The appeal is disposed of in the above terms.

Summary

Issues:
- Imposition of penalties for failure to file periodical returns electronically under Central Excise Rules, 2002 and Cenvat Credit Rules, 2004.
- Applicability of penalties under Rule 27 of Central Excise Rules, 2002 and Rule 15 (A) of Cenvat Credit Rules, 2004.
- Validity of penalties imposed by the Original Authority and modified by the Commissioner (Appeals).
- Acceptance of manual returns by the jurisdictional authorities and the requirement of electronic filing.
- Justifiability of penalties considering the circumstances and legal provisions.

The judgment addresses the imposition of penalties on the appellant for not filing periodical returns electronically under Central Excise Rules, 2002, and Cenvat Credit Rules, 2004. The Original Authority imposed penalties of ?30,000 under Rule 27 of Central Excise Rules, 2002, and ?1,00,000 under Rule 15 (A) of Cenvat Credit Rules, 2004. On appeal, the penalties were modified to ?15,000 and ?50,000, respectively, by the Commissioner (Appeals). The appellant challenged these penalties on the grounds that the proceedings were initiated for non-submission of electronic returns for the years 2008-2009 to 2013-2014, despite submitting returns in hard copy to the jurisdictional officer. The appellant also argued that they consistently filed the main monthly returns electronically and that penalties for failure to file electronically should not apply before the mandatory e-filing requirement was introduced in 2011/2012.

The appellant's counsel contended that the penalties were unjustified as the department had accepted manual returns filed in hard copy during the relevant period and that no irregularity or short payment of duty was associated with these returns. The appellant highlighted that the department should have guided them on complying with the new electronic filing requirement when it was introduced. The judge acknowledged the appellant's compliance with electronic filing for main monthly returns and the lack of penalties for the period before the e-filing mandate for other returns in 2011/2012. Considering the factual and legal aspects, the judge found the penalties excessive and restricted them to ?5,000 each under Rule 27 of Central Excise Rules, 2002, and Rule 15 (A) of Cenvat Credit Rules, 2004. The appeal was disposed of accordingly, emphasizing the need for proper guidance and justifiable penalties in such cases.