2015 (6) TMI 819 - AT - Central Excise

Penalty for non maintenance of records - manufacturer of cigarettes works under physical control - Applicability of Circular No. 224/37/2005-CX.6, dated 24-12-2008 - Held that - Appellants are required to file monthly returns as specified by the notification but no notification has been issued to maintain the records as desired by the lower authorities in the impugned order. Moreover, I have gone through the earlier Rules also i.e. Central Excise Rules, 1944. As per these Rules, Rule 94 requires that appellants are required to maintain such records but there is no provision of maintaining such records as cited by the lower authorities in the impugned order under new Rules. Therefore I hold that penalties are not imposable on the appellants and impugned orders are set aside - Decided in favour of assessee.

Summary

Issues:
- Imposition of penalty under Rule 27 of the Central Excise Rules, 2002 for failure to maintain records and submit quarterly returns.

Analysis:
The appellants were in appeal against an order imposing a penalty of Rs. 5,000/- each under Rule 27 of the Central Excise Rules, 2002. The case involved the allegation that the appellants, registered for manufacturing cigarettes, failed to maintain prescribed records and submit quarterly returns as required by the Commodity Manual for Cigarettes and Circular No. 224/37/2005-CX.6. The failure to maintain records and submit returns led to the imposition of penalties under Rule 27. The appellants argued that after the introduction of the Central Excise Rules, 2002, there was no provision mandating the maintenance of specific records mentioned in the Circular. They contended that they were complying with statutory records and filing their ER 1 return regularly, thus the penalties were unwarranted. The advocate highlighted the absence of a requirement to maintain such records under the new Rules, unlike the previous Central Excise Rules, 1944.

The learned advocate for the appellants argued that the provisions for maintaining specific records had been removed with the introduction of the new Rules, and therefore, penalties should not be imposed. On the other hand, the AR contended that the appellants' non-compliance with the C.B.E & C. Circular amounted to a contravention of Rule 12 of the Central Excise Rules, 2002, justifying the penalties imposed by the lower authorities. The Tribunal examined Rules 10, 11, and 12 of the Central Excise Rules, 2002, which outlined requirements for maintaining daily stock accounts, removal of goods on invoice, and filing monthly returns. Rule 12 mandated the submission of monthly returns as specified by notification, but the Tribunal noted that no notification had been issued mandating the maintenance of the specific records mentioned in the impugned order.

The Tribunal further compared the provisions of the earlier Central Excise Rules, 1944, specifically Rule 94, which required the maintenance of certain records. However, under the new Rules, there was no such provision necessitating the maintenance of the records cited by the lower authorities. Consequently, the Tribunal held that the penalties were not applicable to the appellants, setting aside the impugned orders and allowing the appeals with any consequential relief.