Whether appellant was liable to pay penalty for non submission of LUT and ARE-1 when other export documents were filed?

PJ/Case Law/2013-14/1707

Case:- HYDRAULICS INDIA SERVICES PVT.LTD. VERSUS COMMR. OF C.EX., BANGALORE-II

Citation:-2013(294) E.L.T. 163 (Tri.-Bang.)

Brief Facts:-After examining the records and hearing both sides, Tribunal was of the view of that the appeal itself requires to be finally disposed of at this stage. Therefore, after dispensing with pre-deposit, the appeal was taken up.
This appeal is directed against a penalty of Rs. 10,000/- imposed on the appellant under Rule 25 of the Central Excise Rules, 2002. The relevant show- cause notice had proposed to recover Central Excise duty along with Education Cess from the appellant under Section 11A of the Central Excise Act with interest thereon under Section 11AB of the Act and also to impose penalty on the party 'under Section 11AC read with Rule 25' ibid. The demand of duty was raised in respect of certain goods cleared for export but without LUT and ARE-1. Other export documents viz., shipping bill, invoice, etc., had been duly made and filed and the goods exported. In adjudication of the show-cause notice, the original authority dropped the demand of duty after verification of the shipping bill and bank realization certificate produced by the party as proof of export of the goods. The exporter's omission with regard to LUT and ARE-1 was reckoned as a procedural lapse and, in a lenient view, the adjudicating authority refrained from taking further action in the matter. The party was cautioned for the future and further proceedings were dropped. The Order-in-Original was reviewed in the department and an appeal preferred to the Commissioner (Appeals). The appellate authority imposed a penalty of Rs. 10,000/- on the party under Rule 25 of the Central Excise Rules, 2002 by relying on a decision of the Tribunal. It took the view that the party was liable to pay penalty under the said Rule for contravention of the provisions of Notification No. 42/2001-C.E. (N.T.),dated 26-6-2001 which had prescribed certain conditions for export of goods under bond without payment of duty.

Appellant Contention:-In the present appeal against the above penalty, the main ground raised by the appellant is that there can be no penalty under Rule 25 where there is no duty liability. It has also been submitted that the appellant did not have effective opportunity to defend themselves vis-a-vis the proposal of penalty under Rule 25 inasmuch as any sub-rule of Rule 25 was not specified in the show- cause notice. It has also been submitted, that when the substantial requirements of exports under Rule 19 were satisfied by the appellant, any penalty under Rule 25 was not proper. The appellant has also endeavoured to distinguish the Tribunal's decision relied on in the impugned order. Learned counsel for the appellant has reiterated the grounds of this appeal and has urged that the penalty be vacated.

Respondent Contention:- Learned SDR has argued in support of the appellate Commissioner's order.

Reasoning of Judgment:-After considering the submissions, we have no hesitation to set aside the penalty. The show-cause notice proposed to impose a penalty under Section 11AC of the Central Excise Act read with Rule 25 of Central Excise Rules, 2002. No penalty under Section 11AC has been imposed in this case inasmuch as any of the ingredients for such penalty did not exist in this case, nor was there any allegation in the show-cause notice even. It is not in dispute that the goods were exported after filing the basic export documents viz., shipping bill etc. The omission with regard to LUT and ARE-1 was accepted by the original authority as a procedural lapse and this approach was not faulted by the Commissioner (Appeals). If that be the case, there can be no penalty on the appellant under any of the provisions of Rule 25.

Decision:-The impugned order is set aside and this appeal is allowed.

Comment:-The essence of this case is that appellant exported goods without LUT and ARE-1 but all relevant documents like Shipping bill, invoice, etc., had been duly made and filed and the goods exported and substantial requirements of exports under Rule 19 were satisfied by the appellant. Hence penalty is not imposable under any of the provision of Rule 25 for procedural lapse.

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PJ/Case Law/2013-14/1707

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