Enforcement of penal provisions for non - submission of returns - Board's direction to field formations
AS per Central Excise Law, an assessee is required to file different types of returns depending on its applicability to them. Some of them are monthly viz., ER-1, ER-2 and ER-6, some are quarterly viz., ER-3 and some others are yearly viz., ER-4, ER-5 and ER-7.
Further this law also envisages self-assessment of duty by the assessee and filing of the prescribed returns periodically, so that department is kept informed about the assessment and duty payments by the assessee. The fundamental ingredient of this trust based scheme is the regular filing of returns by the assessee. These returns enable the department to verify the duty payment, CENVAT credit taken and other such parameters related to assessment.
Now the Board has come to know that many assessees are not filing the returns at all and some others are submitting the same after long delays (is this based on the feedback they have got from ACES – does the Board not realize that there is no enthusiasm in the field for filing of returns using ACES). This problem has been found to be more pronounced in the case of specialized returns like ER-5, ER-6 and ER-7. Board also observes that the field formations do not identify the defaulters and take necessary follow up action to ensure submission of these returns (this is very strange given the enthusiasm with which range officers usually follow up on the monthly statutory returns for ‘obvious' reasons).
Board states that scrutiny of returns is an essential and basic job of the Central Excise Ranges in the field formations. Scrutiny includes identifying the assessees who have not submitted the prescribed returns, and taking follow-up action to ensure that these returns are filed at prescribed periodicity. In this regard, it is also pointed out that penalty under Rule 27 of Central Excise Rules, 2002 and Rule 15A of CENVAT Credit Rules, 2004 can be invoked against such errant assessees.
In view of this, Board directs that immediate action may be taken by the jurisdictional Commissioners to institute a mechanism to identify such defaulters, and ensure that follow up action including invoking penalty under the provisions of Central Excise law are taken against them. The jurisdictional Chief Commissioners shall also monitor the proper working of this mechanism every quarter.
In fact, many of the assessees are not filing these returns not because of any wilful violation of law, but because of lack of manpower. A lot of precious time goes into compilation of the data for these returns and these days, manpower is not cheap. An assessee told DDT that he would rather pay the penalty of Rs 5,000/- than spend more money on preparation and filing of these retunrs.
And what do they do with these returns? These returns are so complicated that the assessee has to spend precious hours preparing these returns which are not at all used for any purpose by the Board. The Board should depute some of its officers, especially the bright ones who drafted these returns, to the offices of the assessees to help the assessees to fill up these forms. Then they will know how difficult these returns are.