Modification of Penalty for ER-6 Monthly Returns Non-Filing by Private Limited Company

The Tribunal modified the penalty imposed on a Private Limited Company for failing to file ER-6 Monthly Returns, reducing it to Rs. 500 per return totaling Rs. 18,000, considering the unintentional nature of the default and absence of revenue loss. The appellant's bonafide belief in an exemption from filing these returns under specific notifications was acknowledged, leading to a significant reduction in the penalty amount from the initial imposition of Rs. 1,80,000.

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Issues: Failure to file ER-6 Monthly Returns, Penalty Imposed, Bonafide Belief Contention, Revenue Loss

Failure to file ER-6 Monthly Returns:
The case involved the appellant, a Private Limited Company engaged in manufacturing motor vehicle parts, failing to file ER-6 Monthly Returns for the period 2012-2015. The requirement to file these returns was specified by Notification No.41/2004-CE (NT) dated 25.11.2004. An exemption from filing was initially granted to assesses with excise duty payments through account current below Rs. 1.00 Crore, but this exemption was later omitted by Notification No.41/2008-CE (NT) dated 29.09.2008. The appellant's failure to file these returns until March 2016 led to a show-cause notice and imposition of penalties under Rule 15A of Cenvat Credit Rules, 2004.

Penalty Imposed:
The Adjudicating Authority imposed a penalty of Rs. 5,000 per return for the non-filing of each ER-6 Monthly Return, totaling Rs. 1,80,000 (Rs. 5000 x 36 returns). On appeal, the Commissioner (Appeals) accepted the appellant's contention of bonafide belief and reduced the penalty by 50%, considering the default as unintentional and not resulting in any revenue loss. The appellant further appealed to the Tribunal seeking a reduction in the penalty amount.

Bonafide Belief Contention:
The appellant argued that they maintained proper accounting and statutory records, including Raw Material Register and Daily Stock Account, and believed there was an exemption from filing ER-6 returns under Notification No.39/2004-CE (NT) as long as duty paid through PLA did not exceed Rs. 1.00 Crore. They contended that filing ER-6 returns was merely a procedural compliance with no revenue implications, requesting a token penalty to serve the ends of justice.

Revenue Loss:
The appellant demonstrated a bonafide belief in the exemption from filing ER-6 returns based on their understanding of the relevant notifications. They had been diligent in filing other required returns, such as ER-1 and ER-5, and argued that the failure to file ER-6 returns was unintentional and did not result in any revenue loss to the exchequer. The Tribunal, after considering the submissions from both sides, modified the penalty to Rs. 500 per return, totaling Rs. 18,000 (Rs. 500 x 36 returns), under Rule 15A of Cenvat Credit Rules, 2004, acknowledging the unintentional nature of the default and reducing the penalty amount in the interest of justice.

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