2019 (1) TMI 1224 - AT - Central Excise

Penalty - it was alleged that the adjudicating authority has levied the penalty on the appellant without issue of show-cause notice and also without providing an opportunity of hearing - principles of natural justice - Held that - On certain occasion there was a delay in filing the return by the appellant as the appellant was unaware of the requirement of ER-1 returns under the mistaken belief that they were not required to file the same as they were not liable to pay the excise duty on account of the exemption - Further the Superintendent vide the Demand Order dated 21.03.2016 has imposed the penalty for delayed filing of the ER-1 returns without affording an opportunity of hearing and without issuing a show-cause notice which is a mandatory requirement for imposing any penalty. Further the Commissioner (Appeals) has also not considered the violation of the principles of natural justice. The observation of the Superintendent in the Demand Notice that there is no need to pass a speaking order is not tenable in law - the impugned order imposing penalties for late filing the ER-1 return is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeals against penalty for late filing of ER-1 Returns under Central Excise Rules, 2015.

Analysis:
The appeals were directed against a common order dismissing all four appeals related to penalties imposed on the appellant for late filing of ER-1 Returns. The issue involved penalties imposed under Central Excise (Amended) Rules, 2015, read with Notification No. 8/2015 Central Excise (N.T) Rules, 2002. The penalties for late filing in each appeal were detailed, ranging from Rs. 21,800 to Rs. 1,39,800. The appeals were disposed of collectively due to identical issues. The appellant argued that the impugned order lacked legal sustainability, as it failed to consider facts, evidence, and the law properly. The appellant contended that the Demand Order by the Superintendent of Central Excise exceeded legal authority, contravening the Central Excise Act and Rules. Additionally, the appellant was penalized without a show-cause notice or an opportunity for a hearing, violating principles of natural justice. The appellant had Central Excise Registration and availed exemption under Notification No. 11/2013 for excisable goods, filing 'nil' returns with unintentional delays. The Commissioner (Appeals) allegedly did not consider these submissions, merely stating that ignorance of the law is not an excuse.

The Assistant Commissioner (AR) supported the findings of the impugned order. Upon reviewing submissions and records, the Judicial Member found that delays in filing returns occurred due to the appellant's unawareness of the ER-1 return requirement, believing they were exempt from excise duty. The Superintendent's penalty imposition lacked a show-cause notice and a hearing, mandatory for such penalties. The Commissioner (Appeals) also failed to address the violation of natural justice principles. The Superintendent's stance that a speaking order was unnecessary was deemed legally untenable. The Judicial Member emphasized the necessity of a show-cause notice and a hearing before imposing penalties. Consequently, the penalties for late ER-1 return filing were deemed unsustainable in law. Therefore, all four appeals were allowed, and the penalties were set aside.

The operative portion of the order was pronounced in open court on 02/01/2019, granting relief to the appellant by nullifying the penalties imposed for late filing of ER-1 Returns.