waiver of penalty for non filing of NIL return of ER3

[BEENA MANADATH]

One of my clients is a manufacturer of curry powder. He has Central Excise Registration eventhough he got SSI Regn. He failed to file ER3 Return for 2 quarters. Department issued notice for paying penilty of ₹ 20000/- for each quarter. Is waiver of that penalty available for my client...?

Please clarify..

Regards,

CA.Beena

[Mahir S]

In Excise, there was no separate penal clause for charging penalty for late filing of Excise Return. Under general clause Penalty for late filling of return was levied.

However, now under Rule 12 (6) of Central Excise Rules, 2002, 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/-.

You have not mentioned the Quarter for which such returns were not filed. However, you can count the days of delay from the due date of filing of such returns and accordingly pay the penalty amount.

[KASTURI SETHI]

Yes. There is no option except to deposit the due amount of penalty. The department is very strict now. Special provision has been inserted for imposition of penalty.Prior to issuance of Notification No.8/15-CE(NT) dated 1.3.15, penalty for late filing of return was being imposed upon under Rule 27 of CE Rules, 2002 and there under penalty was being waived on genuine grounds by the Adjudicating Authority but now no chance for waiver of penalty for late filing of return. In Service Tax also, Section 80 has also been omitted.

Time will come even the ACES System will not upload the return, if penalty is not deposited. So assessee has to be careful.

 

[YAGAY andSUN]

Dear Beena,

M/s Suchak Marketing Pvt Ltd Vs. Comm. of Service Tax, Kolkata [2013 (6) TMI 641] may come to your client's rescue as Nil return was not filed. Further, you may request to the concerned authority for a lenient view since your client is a SSI Unit.

Regards

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Ganeshan Kalyani]

If the delay is genuine then support of case law can be sought for. In one practical situation I have observed that department has granted the delay but upon the main reason that the mistake was inadvertent. Thanks.

[Mahir S]

Sir,

with due respect, it appears that the case law referred above is related to period before the insertion of .C.Ex. Notification No. 08/15 N.T. dated 01.03.2015, hence may not be applicable in the present case.

However, you can surely put the above referred points in your defence submission.

 

[KASTURI SETHI]

I fully agree with Sh.Mahir S. Sir. I also agree with M/s.YAGAY AND SUN and Sh.Ganeshan Kalyani, Sirs to the extent that plea for genuine grounds can be taken for exoneration of penalty before the Adjudicating Authority but chances are bleak. There are a few judgments also but these will not be helpful to the assessee in the changed scenario of Central Excise law, especially, after insertion of Rule 12 (6). I think at present the Adjudicating Authority is bound by law and has no discretion in this aspect. There is no room for sympathy in law though grounds may be genuine. Non-filing of return is a very serious offence though return may be NIL.The Govt. does not know what is being concealed by the assessee by not filing return.

[Mahir S]

Well answered Kasturi ji...

AI Summary

Late filing penalty: statutory daily levy applies to non-filed NIL returns, limiting scope for waiver or remission. Waiver of penalty for non-filing of a NIL ER3 return is constrained by the statutory penalty regime introduced by Rule 12(6) of the Central Excise Rules, 2002: a daily penalty is levied from the due date until filing, subject to a prescribed maximum. Prior discretionary waivers and case law from before the 2015 amendment may have limited relevance; assessees may present genuine inadvertence or SSI status as mitigation, but the amended rule and administrative practice largely restrict remission.