2016 (8) TMI 1021 - AT - Central Excise

Imposition of penalty - Rule 15 of Cenvat Credit Rules, 2004 - non filling of ER-5 and ER-6 returns within the period prescribed - held that - it is found that an identical penalty was imposed on the same applicant for the earlier period, which was challenged before the Tribunal reported in 2009 (11) TMI 947 - CESTAT NEW DELHI , wherein it was held that the contravention for which penalty has been imposed, is only a procedural violation and subsequently the required return has been filed, therefore, imposing penalty for the same is unsustainable. Therefore, by following the same, impugned order is set aside. - Decided in favour of appellant with consequential relief

Summary

Issues: Penalty imposed for non-filing of ER-5 and ER-6 returns under Cenvat Credit Rules.

In the judgment by the Appellate Tribunal CESTAT NEW DELHI, the challenge pertained to a penalty of ?30,000 imposed on the appellant for not filing ER-5 and ER-6 returns within the prescribed period under the rules. The Tribunal noted that a similar penalty was previously imposed on the same applicant for a different period, but it was set aside in a previous order. The Tribunal observed that Rule 15 of the Cenvat Credit Rules, under which the penalty was imposed, does not provide for penalties for offenses other than incorrectly taking Cenvat Credit for inputs or capital goods. Since the contravention was a procedural violation and the required return was subsequently filed, the Tribunal found the penalty unsustainable. Therefore, the impugned order imposing the penalty was set aside, and the appeal was allowed with consequential relief, if any.

This judgment highlights the importance of adherence to procedural requirements under the Cenvat Credit Rules and the limitations on imposing penalties under Rule 15 for specific contraventions related to Cenvat Credit. The decision emphasizes the need for penalties to be in line with the provisions of the rules and for penalties to be proportionate to the nature of the offense. The Tribunal's analysis underscores the significance of considering the specific provisions of the relevant rules when imposing penalties for non-compliance. It also serves as a reminder that penalties should be imposed judiciously, especially in cases where the violation is procedural and subsequently rectified.