2021 (3) TMI 727 - AT - Central Excise

Levy of Penalty - in the SCN, there is no allegation of wilful suppression, concealment of facts, mis-declaration - Applicability of Rule 9A(3)of CER - HELD THAT - During the course of audit itself, the audit team raised the objection, but the appellant did not accept the view of the audit team and did not file the returns. In these circumstances, the extended period of limitation is rightly invoked - Further, penalty imposed under Rule 27 of the Central Excise Rules, 2002 is on higher side and the same is reduced to ₹ 2000 for non filing ER-4 (Yearly) return for the period 2013-14. For ER-4 (Yearly) return for the period 2014-15 and for ER-7 (Yearly) return for the period 2014-15, penalties in terms of Rule 12(6) of the Central Excise Rules, 2002 have been rightly imposed for non filing the returns of ₹ 20,000/- each, the same are confirmed. For ER-5 (Yearly) return for the period 2014-15 and ER-6 (Monthly) for the period August 2014 to March 2016, penalties imposed in terms of Rule 15A of the Central Excise Rules, 2002 for non filing the returns under Rule 9A(3) of the Cenvat Credit Rules, 2004, it is held that at the time of issuance of the show cause notice, the provisions of Rule 9A(3) were omitted without saving clause. - Penalties of ₹ 5000/- and ₹ 95,000/- respectively set aside.

Summary

Issues:
Imposition of penalties under various provisions for non-filing of statutory returns.

Analysis:
The appellant, a manufacturer of bicycles and electrically operated vehicles, faced penalties for not filing statutory returns during the audit period from August 2014 to March 2016. The show cause notice proposed penalties under different provisions for non-submission of returns like ER-4, ER-5, ER-6, and ER-7. The appellant contested the penalties, arguing that there was no allegation of suppression, concealment, or mis-declaration, making the penalties unjustifiable. The appellant also highlighted the absence of Rule 9A(3) at the time of the notice issuance, challenging the penalty of &8377; 95,000 under this rule. The appellant further contended that the notice issued after the deletion of Rule 9A(3) lacked sustainability. The appellant emphasized their regular compliance with filing returns and payment of duties without any intent to unlawfully benefit, thus, asserting that penalties were unwarranted.

On the contrary, the authorized representative argued that penalties were rightfully imposed as Rule 9A(3) was applicable during the relevant period. The Tribunal considered both parties' submissions and found that the appellant did not file returns despite objections raised during the audit, justifying the invocation of the extended limitation period. The Tribunal acknowledged the high penalties imposed and reduced the penalty for non-filing of ER-4 return for 2013-14. However, penalties under Rule 12(6) of the Central Excise Rules, 2002 for non-filing of ER-4 and ER-7 returns for 2014-15 were upheld. Regarding penalties for non-filing of ER-5 and ER-6 returns, the Tribunal noted that Rule 9A(3) was omitted without a saving clause at the time of the notice issuance, leading to the setting aside of penalties amounting to &8377; 5,000 and &8377; 95,000, respectively.

In conclusion, the Tribunal disposed of the appeal by modifying some penalties while setting aside others based on the absence of specific allegations and changes in relevant rules.