Full Judgment
Per M. Veeraiyan:
This is an appeal by the Department against the order of the Commissioner (Appeals) No. 62-CE/ALLD/2008 dated 29.5.08, by which the Commissioner (Appeals) reduced the penalty of Rs.75000/- imposed under Rule 27 by the original authority to Rs. Rs.2,000/-.
2. Heard both sides.
3. The dispute relates to filing of returns by the respondents for the period April 2006 to June, 2007. The respondents were eligible for the benefit of exemption under Notification No.8/03 dated 1.3.2003, as amended. As the customers of the respondents wanted to avail cenvat credit, the respondents instead of availing exemption has chosen to pay duty from 1st April 2006 itself. However, they filed quarterly returns which were applicable to units availing exemption based on value of clearances. The quarterly returns filed by the respondents have been periodically acknowledged by the officer without any reservation/objection. By show cause notice dated 3.10.2007, it was alleged that the respondents have failed to file monthly returns and accordingly, they were required to show cause why penalty should not be imposed on them under Rule 27 of the Central Excise Rules, 2002. The original authority held that the party committed offence 15 times, rendered themselves liable for penal actions 15 times under Rule 27 ibid and accordingly, imposed penalty of Rs.75,000/- [15 x 5000] under Rule 27 ibid. The Commissioner (Appeals) taking note of the fact that the respondents were an SSI unit and were filing returns on quarterly basis which were being accepted by the Department has shown leniency and reduced the penalty to Rs.2000/-.
4. The Committee of Commissioners passed the following Review Order:-
“In terms of sub-section 2 of Section 35B of the Central Excise Act, 194, on an examination of the Order in-Appeal No.62-CE/ALLD/2008 dated 29.5.2008 passed by the Commissioner (Appeals),Customs and Central Excise ,Allahabad and the Commissioner, Central Excise , Lucknow is of the opinion that the said order in appeal is not legal and proper and that an appeal should be filed against the same. Accordingly, the said Committee directs, Joint Commissioner (Review), Central Excise Commissionerate, Allahabad to file an appeal before the Hon’ble CESTAT on the Committee’s behalf against the said order in appeal in terms of the said sub-section 2 of Section 35B of the Central Excise Act, 1944.”
Accordingly, the appeal stands filed.
5. Learned DR reiterates the grounds of appeal.
6. As per the grounds of appeal, the party had defaulted 12 times during the period from April 2006 to March, 2007 in filing monthly ER-1 return. The grounds of appeal also find fault with the Commissioner (Appeals) in excluding the month of June, 2006, September 2006 and December 2006 from the total defaults.
7. The Department has chosen to seriously pursue a trivial issue. However, the Committee of Commissioners has not given any valid reason for challenging the order of the Commissioner (Appeals). It is not being disputed that the officers were also regularly accepting the quarterly return and woke up nearly after 1 = years. There is no allegation or finding of evasion of excise duty. The technical violation is clearly due to misunderstanding not only by the assessee but also by the officers of the Department. There is no minimum penalty prescribed under Rule 27 of the Central Excise Rules, 2002. Under these circumstances, the Leniency shown by the Commissioner (Appeals) is not unjustified. The review of the order has been taken without application of mind.
8. There are no valid grounds adduced to interfere with the order of the Commissioner (Appeals). The appeal by the Department is, therefore, rejected.