ER-1 returns not filed on time – SCN issued after 4 years for penalty
We received this mail from a Mumbai assessee -
I am a vintage assessee and have seen the resplendent Central Excise Rules of the year 1944 and its poor offspring, the CER, 2001 and the one in vogue CER, 2002. I try to follow the law as far as possible (AFAP) and to the best of my understanding so that I am never the victim of any Show Cause notice. After all these years, I was surprised when I received a show cause notice from the Central Excise authorities. The said notice seeks to impose penalty on me under rule 27 of the CER, 2002 and the offence is that the ER-1 return for the winter month of February 2004 supposed to be filed by 10th March was filed a tad late by me.
Actually, this notice shook me for the simple reason that here I was in the throes of a hot summer of year 2009 and the department out of nowhere recollects some ‘technical offence' committed by me nearly five years ago.
I regained my composure and tried to find a reason as to how this could happen. Was it that Audit conducted some time back when the officers were rummaging through my old records that this ‘offence' came to their notice? Or is it that the range officers were examining files for carrying out weeding operations that they stumbled upon this ‘precious' ER-1 return of mine? This was a blot on my reputation, I said, and which should be taken very seriously.
The show cause notice issued almost five years after the alleged ‘offence' was committed simply invoked rule 27 of the CER, 2002 and obviously so because no Central Excise duty was to be recovered. Okay, for technical offences, there is no time limit is what you may say.
Rule 27 of the CER, 2002 reads –
Rule 27,General penalty.- A breach of these rules shall, where no other penalty is provided herein or in the Act, be punishable with a penalty which may extend to five thousand rupees and with confiscation of the goods in respect of which the offence is committed.
The fact of the matter is that the goods which were covered in the ER-1 return have probably reached the end of their journey on the earth and are not available for confiscation. So, there is also no question of redemption fine in view of the recent Larger Bench decision in Shiv Kripa Ispat Ltd. []. As for penalty, I would better brace myself for the occasion rather than spending a fortune and hiring some Consultant.
Through DDT, I would like to appreciate the diligent efforts of the departmental officers who rummaged through my old records and gave me the opportunity to interact with an adjudicating officer.
Dear Netizen, be sure that the Adjudicating Authority will confirm the demand and if a Commissioner (Appeals) has the generosity to quash that order, the Department will go in appeal. Your rendezvous with litigation is going to be long – have a nice time.
The Great cartoonist R K Laxman had a brush with the Bombay Customs when they detained a book imported by him. About a year after the incident, he got a letter from the Assistant Collector that he had taken a lenient view and decided to let off Laxman.
Laxman wrote in Idle Hours that he was surprised that he did not even know that he was under Customs investigation. He wondered whether Customs sleuths were peeping into his bed room to investigate his reading habits. His point was that even without your knowing it, you could be an accused or an offender until let off by a benign Assistant Collector.