Excise Duty paid on removal of goods but report in ER1 as short paid by typrographyical mistake

[gopinath lakshmanan]

Repsected sir,

In sept 2014 ER1 return, we have shown Duty payable amt but in case of Duty paid amt we have shown less by ₹ 200000 by mistake. the mistake is happened as follows. the addl duty was taken as input credit ₹ 200000 which is showed in sept14 return perfectly and the same is utilised in Sept 2014. but the utilisation amt of ₹ 2 lakhs was not shown in ER1 sept14 return.

Now my clarification is, whether the dept can issue a show cause notice to pay ₹ 200000 as short paid along with interest and penalty. Pls note that we had balance of duty of ₹ 1.5 crore in Sept 2014. the same balance still maintained month on month as of date.

Regards,

Gopinath

[KASTURI SETHI]

Sh.Gopinath Lakshmanan Ji,

You have shown duty 'as paid' in invoice. You have shown duty 'as paid' in books of account. You have shown duty as payable in ER-I but not debited in Cenvat Account in ER.I return. Since you have declared duty as payable, you have concealed nothing from the department. No suppression is involved. Hence penalty on the ground of fraud, concealment, suppression cannot be imposed under Section 11 AC. However, you will have to debit the said amount along with interest in the columns of arrears of duty & interest in the next ER-I return due.

This is a procedural lapse and for this lapse maximum penalty of ₹ 5000/- is imposable under Rule 27 of Central Excise Rules, 2002. If you inform your jurisdictional Range Officer along with a copy to the Division Office, it will prove your bona fides. In such case, the Asstt.Commissioner/Dy.Commissioner has power not to issue SCN and waive penalty which is otherwise imposable under Rule 27 ibid.

Thus you will be tension free during the audits to be conducted by the department as well as A.G.Office.

 

[gopinath lakshmanan]

Respected Sir,

Thanks for reply . my another clarification is that whether the amount of ₹ 200000 can be debit in ER1 next return or we have pay through GAR challan (PLA) of such amount. also clarify the effective interest rate.

Regards,

Gopinath.l

[KASTURI SETHI]

Dear Sir,

Duty paid status/character is same whether you debit through Cenvat Account or in cash. Moreover, you were having sufficient balance during September, 14. Rate of interest applicable is 15%. Regarding rate of interest, in Central Excise rate of interest is 15% w.e.f. 1.4.16 and in Service Tax w.e.f. 14.5.16 i.e. the date of enactment. Now both Central Excise and Service Tax are at par except some conditions in Service Tax.

Regarding applicable rate of interest, also carefully read lengthy discussion against Issue ID no.110369 dated 19.5.16 and then take final decision. However, you may ask further query in this forum, if still any doubt.

[Ganeshan Kalyani]

Sir, I agree with Sri Kasturi Sir's view. It covers all the aspects. It is true that corrective action taken before issue of any notice by the department or being pointed out by the departmental auditor will make you free from lengthy proceedings. Thanks.

AI Summary

Procedural lapse in excise reporting can be corrected in subsequent return or payment to avoid extended proceedings. A typographical omission in ER-I that left an amount undebited to Cenvat, despite being declared payable and recorded in invoices and books, is a procedural lapse not suppression. The omitted duty should be debited in the arrears columns of the next ER-I return or adjusted/paid through the duty account; doing so and notifying jurisdictional officers evidences bona fides and can avert show cause notices. A limited penalty under the Rules may apply for procedural errors, and interest is chargeable under excise provisions.