M/S J.D. Engineering vs C.C.E.-New Delhi

Date of Pronouncement: 29/06/2015

Appeal No. E/54475/2014-EX(SM)

(Arising out of OIA No. 83/CE/DLH/2014 dated 19.5.2014 passed by Commissioner (Appeals) Central Excise New Delhi)

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of the order?

4. Whether order is to be circulated to the Department Authorities?

M/s J.D. Engineering Appellant

Vs.

C.C.E.-New Delhi Respondent

Appearance:

Present for the Appellant: Shri Ravinder Singh, Consultant

Present for the Respondent: Shri Ranjan Khanna, DR

Coram: Honble Ms. Sulekha Beevi C.S., Member (Judicial)

Final Order No.52038/2015

Per: Sulekha Beevi C.S.

The appellant is aggrieved by the Order-in-Appeal dated 19.5.2014 passed by the Commissioner (Appeals) imposing penalty of Rs.5,000/- under Rule 27 of the Central Excise Rules 2002.

2. The brief facts of the case are that the appellants are engaged in the manufacture of electrical appliances falling under chapter 85 of the Central Excise Tariff Act, 1985. The appellants cleared the goods for export after complying with the requirements under Notification No. 42/2001-C.E.(N.T.) dated 26.06.2001. A show cause notice dated 19.7.2013 was issued to the appellants alleging that the letter of undertaking (Form UT-1) having been not renewed was not in accordance with the Notification No. 42/2001-CE(NT) dated 26.06.2001 and the Boards Central Excise Manual Supplementary Instructions 2005. The adjudication was concluded by confirming the demand of Rs.55,642/- as Central Excise duty and ordered recovery of the same along with interest, besides imposing penalty of equal amount under section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002.

3. The above Order-in-Original was challenged in appeal before the Commissioner (Appeals). In the Order-in-Appeal dated 19.5.2014, which is the impugned order herein, the Commissioner (Appeals) held that once the goods are exported out of India and proof of export is on record, the role of Bond/LUT is complete. There is no loss of revenue to the Government exchequer. That there was only procedural lapse on the part of appellants to get the letter of undertaking renewed after expiry of every 12 months as stated in the chapter 7 of CBECs Excise Manual of Supplementary Instructions, 2005. The Commissioner (Appeals) relied upon the decision of Joint Secretary (RA) to Government of India in RE Cotfab Exports, 2006 (205) E.L.T. 1027 (G.O.I.) and held the procedural lapse can be condoned. Thus the Commissioner (Appeals) set aside the duty demand of Rs.55,642/- and the penalty of equal amount imposed under section 11AC of the Central Excise Act, 1944. But on the finding that the there was fault on the appellant for not getting the letter of undertaking renewed, which amounted to a procedural lapse, the Commissioner (Appeals) imposed a penalty of Rs.5,000/- (Rupees Five Thousand only) under Rule 27 of the Central Excise Rules 2002. The present appeal is filed challenging this penalty.

4. The learned Departmental Representative reiterated the findings of the Commissioner (Appeals) and submitted that Para 3.4 of chapter 7 of CBECs Excise Manual of Supplementary Instructions says that a letter of undertaking shall be valid for 12 months provided the exporter complies with conditions of the letter of undertaking. That the appellant failed to renew the LUT and therefore did not abide by the procedure contemplated by law, for which reasonable penalty under Rule 27 has been imposed.

5. Contradicting the above submissions, the learned counsel for appellant challenged the imposition of penalty on two grounds. Firstly that there was no procedural lapse committed on the part of the appellant. That there is nothing in the provisions of law including the Notifications No. 42/2001-CE(NT) dated 26.06.2001 requiring the party to get the LUT renewed periodically. He submitted that the reliance placed by the authorities below on the CBECs Central Excise Manual of Supplementary Instructions, 2005 is totally misconceived. Secondly, that the imposition of penalty is unsustainable for the sole reason that there was no mention of the same in the show cause notice.

6. I have considered the rival submissions carefully. Undisputedly the Notification No. 42/2001-CE(NT) dated 26.06.2001 does not state that the LUT has to be renewed every twelve months. The notification says that the manufacturer-exporter may furnish a letter of undertaking in the form specified in Annexure II in lieu of a bond. In para 3.4 of Chapter 7 of CBECs Central Excise Manual of Supplementary Instructions, 2005 it is seen stated that the Letter of undertaking shall be valid only for a period of twelve months. Needless to say that instructions are issued by the Board to bring uniformity in administration of law. Such instructions or circulars intended to clarify and bring uniformity has to be consistent and in accordance with relevant statutory provisions. The instructions cannot enlarge or reduce the scope of statutory provisions. Further, after issuing a notification, the Board cannot subsequently issue an instruction so as to add a new condition, which restricts the notification. The appellant here in has submitted the triplicate and quadruplicate copies of the relevant ARE-I. In such circumstances when proof of export is on record the failure if any, to comply with such instruction which is not in accordance with the Notification No. 42/2001-CE(N T) dated 26.06.2001 cannot be held to be procedural lapse. The purpose sought to be achieved by such instruction is to establish the genuineness of export of goods. When the proof of export is on record otherwise, to give undue reliance upon the instruction is not called for. The imposition of penalty is otherwise also unwarranted for the reason that the show cause notice does not mention of levy of penalty under Rule 27 of Central Excise Rules, 2002.

7. It is rightly pointed out by the counsel for appellant that the SCN does not propose to levy penalty under Rule 27 of the Central Excise Rules, 2002. On such score also the levy of penalty is illegal. It is also submitted by the counsel for appellant that in the appellants own case No. E/5123A/2014, on the very same issue, this Tribunal has passed Final Order on 19.06.2014 in favour of the appellant.

8. From the above discussions, I hold that the imposition of penalty of Rs.5,000/- under Rule 27 of the Central Excise Rules 2002 is unsustainable . The same is set aside. The appeal is allowed accordingly.

(Pronounced on 29/06/2015)

(Sulekha Beevi C.S.)

Member (Judicial)

K. Gupta

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