2016 (7) TMI 82 - AT - Central Excise

Court Reduces Penalties for Appellant's Electronic Filing Noncompliance

M/s. Diamond International Private Ltd. Versus CCE, Delhi-II

M/s. Diamond International Private Ltd. Versus CCE, Delhi-II - TMI Issues:- Imposition of penalties for failure to file periodical returns electronically under Central Excise Rules, 2002 and Cenvat Credit Rules, 2004.- Applicability of penalties under Rule 27 of Central Excise Rules, 2002 and Rule 15 (A) of Cenvat Credit Rules, 2004.- Validity of penalties imposed by the Original Authority and modified by the Commissioner (Appeals).- Acceptance of manual returns by the jurisdictional authorities and the requirement of electronic filing.- Justifiability of penalties considering the circumstances and legal provisions.The judgment addresses the imposition of penalties on the appellant for not filing periodical returns electronically under Central Excise Rules, 2002, and Cenvat Credit Rules, 2004. The Original Authority imposed penalties of Rs. 30,000 under Rule 27 of Central Excise Rules, 2002, and Rs. 1,00,000 under Rule 15 (A) of Cenvat Credit Rules, 2004. On appeal, the penalties were modified to Rs. 15,000 and Rs. 50,000, respectively, by the Commissioner (Appeals). The appellant challenged these penalties on the grounds that the proceedings were initiated for non-submission of electronic returns for the years 2008-2009 to 2013-2014, despite submitting returns in hard copy to the jurisdictional officer. The appellant also argued that they consistently filed the main monthly returns electronically and that penalties for failure to file electronically should not apply before the mandatory e-filing requirement was introduced in 2011/2012.The appellant's counsel contended that the penalties were unjustified as the department had accepted manual returns filed in hard copy during the relevant period and that no irregularity or short payment of duty was associated with these returns. The appellant highlighted that the department should have guided them on complying with the new electronic filing requirement when it was introduced. The judge acknowledged the appellant's compliance with electronic filing for main monthly returns and the lack of penalties for the period before the e-filing mandate for other returns in 2011/2012. Considering the factual and legal aspects, the judge found the penalties excessive and restricted them to Rs. 5,000 each under Rule 27 of Central Excise Rules, 2002, and Rule 15 (A) of Cenvat Credit Rules, 2004. The appeal was disposed of accordingly, emphasizing the need for proper guidance and justifiable penalties in such cases.