DELAY IN SUBMISSION OF E.R.1 RETURNS.

[ASHOK AMIN]

Dear Experts,

Can anyone give me a concrete reply to this querry;

We are a manufacturing unit and with more than 4 crore turnover. We file monthly returns by 10th of the following month. Due to financial crisis we are unable to pay duty of an amount ₹ 6 lacs in time. There is a strike of banks for three days (friday, saturday & sunday) due to which our bank are unable to release the amount. Now, in such a situation if we pay the balance duty on monday i.e. 11th with interest and thereafter we file the returns on the same day, will there be any penalty levied on us. If yes, how much penalty we will have to pay ? We would like to have the complete details of penalty in case of late filing of returns. Please give us the reply urgently.

[MUKUND THAKKAR]

maximum 5000/-

[KASTURI SETHI]

Sir,

Two offences have been committed. These are:-

1. Late deposit of Central Excise duty for five days (7.1.16 to 11.1.16 including the date of deposit ) ----------------------- Contravention of Rule 8(1) of CE Rules, 2002

Since delay in deposit of duty is less than one month, Rule 8 (3A) is not attracted. Here general penalty is attracted under Rule 27 of CE Rules, 2002 which is maximum ₹ 5000/-

2. Late filing of ER.1 return (for one day only)----------- Contravention of Rule 12 (1) of CE Rules,2002

In addition to late fee under Rule 12(6) of CE Rules, 2002, General Penalty under Rule 27 is imposable which is ₹ 5000/- (Maximum). Since it is maximum, delay for filing ER.1 is just one day, the Adjudicating Authority can impose less than ₹ 5000/- and also can exonerate, if SCN is issued. However, no chance for issuance of SCN.

Therefore, as per Rules, maximum penalty of ₹ 10,000/- is imposable.

Further the department is not so harsh. You can seek waiver of SCN and AC may exonerate or reduce penalty to minimum. There are so many case laws for lenient views on this very issue.

 

 

[Guest]

Dear Sirs

If return file before 10 th and balance excise duty show in return in payable and balance excise duty deposite after 10 th with interest. And same intimate to range officer. It is suitable as per excise view.

[KASTURI SETHI]

I think Sh.Ashok Amin, having experience of 18 years in Central Excise matters, is well aware of this procedure/option as suggested by Sh.Prabhakar Singh. He sought for opinion on computation of exact amount of penalty in a given situation.

[KASTURI SETHI]

I agree with Sh.Prabhakar Singh, Sir, to the extent of showing balance amount of duty as payable in ER.1 return and avoid penalty for late filing return. Otherwise 10th January being Sunday, last date of filing return will be 11.1.2016.

[Guest]

Agreed, Since late filing of Return is only one day Then You are required to pay one hundred Rs. because late fees as mentioned in Rule 12(6) of Central Excise Rules, 2002 is ₹ 100 per day subject to maximum of ₹ 20,000 for each return i.e. ER-1,3,8,4,7

Same governing provisions are there in Rule 17 (6) for EOU.

This late fees is apart from General Penalty as mentioned in Rule 27 i.e. of ₹ 5,000 (Maximum)

Regards

Prem

[KASTURI SETHI]

Sh.Prem Bajaj Ji,

There is also delay for 5 days in deposit of duty. That will also attract general penalty under Rule 27 which is maximum ₹ 5000/- This is in addition to interest charged.

[Mahir S]

Amin ji,

1. First of all, you deposit the duty with interest,
2. Secondly, deposit ₹ 100/- as Late Fees for late filing of return,
3. Thirdly, File online return without any further delay.
4. No need to pay any penalty for late payment of duty, as your contention regarding strike and closure of banks is genuine. You may wait till you your returns get verified by the Range office and/or till excise audit of your unit is undertaken. At that time, you place your views and reasons for late filing of return.

The positive aspect is that you are paying duty with interest and late fees, which is sufficient for the present scenario.

Once the duty is paid with interest, there appears to be no intention to evade payment of duty. Hence, minimal or no penalty may be imposed in the present circumstances.

[KASTURI SETHI]

Sh.Mahir S.,

Sir, Welcome back to Discussion Forum after a long gap of 40 days. We missed you very badly as your views and ideas are thought provoking.We were deprived of your valuable thoughts for a long period of 40 days. Virtually yours valuable thoughts are a whiff of fresh air when enters into into mind unlocks the closed windows of brain.It is not sycophancy. A person who does not always say 'yes' to his friends is really the best friend and well wisher. A novel as well as unique view always enriches knowledge. I was neither aware of you email Id nor phone no. so I could not contact you.

Thanks.

K.L.SETHI

[Ganeshan Kalyani]

I also welcome Mr. Mahir S to TMI after a month and a fortnight. I agree with what Kasturi Sir has said.

[Hasmukh Patel]

There was no any provision for penalty on late submission of ER-1 to 8 before budget 2015.

All the rule for penalty are related to revenue. See the rule 12 & 27 of CER.

With introduction of new amendment in Rule 12 of CER 2002 in budget 2015 now the penalty of ₹ 100 per day subject to maximum of ₹ 20000/- has been insert for late filing of returns. Effective Date is 1^st March 2015.mUnder Rule 12(6) & 17(5) New Sub-Rule introduce in budget 2015 as under.This Rule contains provision relating to various returns. Now Penalty clause is inserted for late filing of Return. Penalty of ₹ 100/- per day is payable for after due date till filing of return, subject to Maximum of ₹ 20000/-

[KASTURI SETHI]

Sh.Ashok Amin Ji,

(JUST FOR INFORMATION AND KNOWLEDGE)

As per Board's circular no.480/46/99-CX dated 23.8.1999 (Para No.4 (iii) (still in force) where advance intimation of a strike/closure of bank has been given to public by bank, no benefit of extension is permitted.

Normally All India Banks Association gives advance notice through press.

[KASTURI SETHI]

Sh.Hasmukh Patel Ji,

Sir, With reference to your views dated 11.1.2016, with due regard I express my views as under:

1. Prior to issuance of Notification No.8/15-CE(NT) dated 1.3.2015 penalty for late filing ER.1 return was imposed under Rule 27 of Central Excise Rules, 2002 (General Penalty). To prove this there are so many case laws but I mention two only as under:-

(i) 2014(310)ELT.812 (Tri.Mumbai) = 2014 (8) TMI 965 - CESTAT MUMBAI (GRAINTOCH INDU S.T.R. IES LTD. Versus COMMISSIONER OF C. EX., AURANGABAD) Invocation of Rule 27 for imposition penalty was not challenged by CESTAT.

(ii) 2011(274)ELT/431 (Tri.Ahmedabad)= 2011 (5) TMI 500 - CESTAT, AHMEDABAD (M/s Anil Products Ltd. Versus CCE Ahmedabad)

2. There is a world of difference between the words 'late fee' and 'penalty' in legal terms. In Rules 12 (6) and 17 (6) of Central Excise Rules, 2002 (inserted vide Notification No.8/15-CE(NT) dated 1.3.2015, neither 'late fee' nor 'penalty' has been mentioned. We may say it a flaw in the law but at the same it is implied that both sub-rules (6) of Rule 12 and (6) of Rule 17 talk of late fee and not penalty. In Service Tax , Section 70 and Rule 7 C for filing return and paying late fee respectively are in Correspondence to Rule 12(1) for filing return, 12(6) & 17(6) for late fee. Section 70 also talks of late fee. Rule 27 of CE Rules is for general penalty for delay in filing ER 1 return & ER.2 return which is in correspondence to Section 77 (2) of the Finance Act for imposing penalty for delay in filing ST-3 return or any contravention.

(3) Late fee is payable for delay in filing returns and penalty is for contravention of Rule 8 (1) of CE Rules and Section 70 & Rule 7 of the Finance Act.

I mean to say at present i.e. after Budget, 2015, late fee and penalty both are payable. Pl. also compare the language of Central Excise Rules and Sections of Finance Act/Service Tax Rules mentioned above.

Case laws can be searched easily on both aspects.

 

 

[Mahir S]

Thanks a lot to Kasturi Sethiji and also to Ganeshan Kalyaniji.

I sincerely thank you from my heart for your love and affection. Your words and appreciation means a lot to me.

What really admired me is the fact that you have even counted the exact days of my absence. It’s just unbelievable and really a sweet and pleasant surprise to read your message.

Thanks again.

[Hasmukh Patel]

Pls. see Circular No. 922/12/2010-CX issued from F.No. 208/2/2009-CX-6 dated 18th May 2010 power to adjudicate is granted to Superintendents. Even here, the power is limited to cases where DUTY up to ₹ 1 lakh is involved. In case of delayed filing of Returns, obviously duty is not involved. For whatever just reasons the filing was delayed, no penalty can be imposed by invoking Rule 27 of CER, 2002

[KASTURI SETHI]

Sir,

I have deeply gone through Board's circular dated 18.5.2010 mentioned by you. There are so many case laws wherein penalty under Rule 27 has been imposed for delay in filing ER.1 return. How you rebut these case laws for the period especially pertaining prior to 1.3.2015 ? Rest it depends upon the questioner's option/discretion how to go ahead ? I have given my views and my interpretation.

[Hasmukh Patel]

Dear Sir,

If possible Pls. send me one decision of court, because I have same problems for late submission of ER-1 & 2.So we can pay the penalty.

[ASHOK AMIN]

Dear All Experts,

I am very much overwhelmed with the response given by all the experts which helped me in every aspects. Happy to be in touch with knowledgable persons.

Thanks once again.

[KASTURI SETHI]

Returns, non-submission of - Commissioners to institute mechanism to identify defaulters and enforce penal provisions

Instruction F. No. 267/117/2010-CX. 8, dated 14-1-2011

Government of India

Ministry of Finance (Department of Revenue)

Central Board of Excise & Customs, New Delhi

Subject : Enforcement of penal provisions for non-submission of returns - Regarding.

[KASTURI SETHI]

Sh.Ashok Amin Ji,

One judgement under Rule 27 of CE Rules.

2011 (274) E.L.T. 431 (Tri. - Ahmd.) = 2011 (5) TMI 500 - CESTAT, AHMEDABAD

IN THE CESTAT, WEST ZONAL BENCH, AHMEDABAD

[COURT NO. II]

Ms. Archana Wadhwa, Member (J)

ANIL PRODUCTS LTD.

Versus

COMMISSIONER OF C. EX., AHMEDABAD

Final Order No. A/815/2011-WZB/AHD/ and Stay Order No. S/673/2011-WZB/AHD, dated 6-5-2011 in Application No. E/S/1794/2010 in Appeal No. E/1855/2010

 

 

 

AI Summary

Late deposit of excise duty and delayed returns attract penalties and late fees; payment with interest and mitigation may reduce liability. Late deposit of excise duty contravenes Rule 8(1) and can attract general penalty under Rule 27 plus interest; delayed ER 1 filing triggers a statutory late fee introduced by recent amendment, which operates alongside interest and does not necessarily preclude penalty for contraventions. Payment of duty with interest, prompt filing and intimation to authorities are mitigating steps; Board circulars, case law and adjudicatory discretion shape imposition, reduction or waiver of penalties.