2022 (9) TMI 123 - AT - Central Excise

Imposition of late fee for filing Central Excise return - Many returns are Nil return - delay for filing returns has been considered for a period from December 2014 to June 2017 - Rule 12(6) of Central Excise Rules, 2002 - HELD THAT - As apparent from the table given in para 5.2 of the impugned show cause notice, it is observed that out of alleged 31 delayed returns, 18 returns therein are NIL returns i.e. for the respective period of said returns i.e. the appellant was not liable to pay duty for the respective period of returns. Hence, appellant cannot be called as assessee for the said particular period. Resultantly, Rule 12 (6) (the amended one) will actually not be applicable upon the appellant for the period during which NIL returns were filed. With regard to the remaining 13 returns, from the aforesaid table of show cause notice that returns though have regularly been filed but with delay, it is clear that the factum of said delay was in the notice of department since December 2014. Raising this issue in ACS scrutiny of the year 2019 cannot give the benefit to the department for invoking the extended period of limitation. - Otherwise also extended period can be invoked only in the case when there is willful mis-declaration or willful suppression. Further, perusal of Rule 12 (6) of Central Excise Rules shows that the late fee cannot be charged over and above Rs. 20,000/- for a period of delay in submission of each return. Seen from that angle, the demand of Rs. 5,42,700/- as late fee is held to be on excessive side - there is no restriction in Rule 12 (6) as has been mentioned by Commissioner (Appeals) in its findings at para 8 of order under challenge. All the entire period of demand is held to be beyond the normal period for which the demand could have been raised - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to imposition of late fee for filing service tax appeals under Rule 12(6) of Central Excise Rules, 2002.

Analysis:
1. The appellant contested the imposition of late fee for filing service tax appeals covering the period from December 2014 to June 2017. The appellant argued that late fee for filing 'NIL' returns, where no tax liability existed, should not have been imposed. Additionally, the appellant objected to the penalty imposed and invoked relevant legal precedents to support their case.

2. The Tribunal observed that the appellant was engaged in manufacturing and supplying various products. The department noted delays in filing ER-1 returns from December 2014 to June 2017, with central excise duty paid through Cenvat credit. A show cause notice proposed recovery of late fee and Cenvat credit. However, the Adjudicating Authorities rejected disallowing Cenvat credit but confirmed the late fee demand under Rule 12(6) of Central Excise Rules, 2002.

3. The Tribunal analyzed Rule 12(6) of CER, 2002, focusing on the term 'assessee' and its applicability to those liable to pay duty/tax. It was established that 'NIL' returns absolved the appellant from being considered an 'assessee' for those periods, leading to the inapplicability of the late fee for those returns.

4. Regarding the remaining returns, the Tribunal noted that the show cause notice issued after three years exceeded the normal period of limitation. The department's failure to act on known delays since December 2014 precluded invoking the extended period of limitation, especially in the absence of willful mis-declaration or suppression.

5. The Tribunal emphasized that mere delay in filing does not constitute willful mis-declaration or suppression, as there was no evidence of intent to evade tax. The demand for late fee on the remaining returns was deemed unsustainable due to the absence of willful acts or suppression, aligning with legal precedents and settled law.

6. Further examination of Rule 12(6) revealed that the late fee could not exceed Rs. 20,000 for each return's delay period. Consequently, the excessive late fee demand of Rs. 5,42,700 was deemed unjustified. The Tribunal set aside the order, ruling it against established legal provisions and allowing the appeal based on the discussed reasons.