At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Bangalore
By, THE HONOURABLE DR. S.L. PEERAN
By, MEMBER (JUDICIAL) & THE HONOURABLE MR. T. K. JAYARAMAN
By, MEMBER (TECHNICAL)
M. S. Nagaraja, Advocate, for the appellant. Shri K. Sambi Reddy, Authorised Representative (JDR), for the Respondent.
The appellant is challenging the levy of penalty of Rs. 10,000/- imposed under Rule 25 of the Central Excise Rules. The Commissioner, in the impugned order No. 06/2006 dated 29.08.2006, has accepted the assessees contention and found that there is no violation or intention to evade duty and has dropped the demand for duty. However, he felt that they have not carried out the statutory obligation cast on them under Rule 19 of CE Rules. The allegation in the Show Cause Notice was with regard to non-furnishing of proof of export within the stipulated time in terms of conditions laid down in Notification No. 42/2001-CE(NT) dated 26.06.2001. The Notification prescribed the time limit for exporting goods viz. six months from the date of clearance from the factory. However, the Commissioner, on perusal of the records, noticed that all the consignments covered in the Show Cause Notice were either exported or diverted for home consumption on payment of duty. Prior permission was obtained from the jurisdictional Assistant Commissioner for the said diversion in respect of 6 ARE-1s. That they also intimated about the diversion for home consumption to the department. He also found that the proof of export was also produced. Therefore, the demand made in the Show Cause Notice with regard to the duty was dropped. He clearly noted in his order that there was no question of raising notice under section 11A of the Act has arisen. Further, he found that the proposal for penal action under Rule 25 of CE Rules is justified, as in respect of 3 ARE-1s, there was a failure to carry out the statutory obligation cast on them. Hence, he proceeded to impose penalty under Rule 25 of the Central Excise Rules to an extent of Rs. 10,000/-.
2. The learned Counsel submits that in respect of the 3 ARE-1s, the assessee had obtained permission from the department for belated export and it exported the same. Thereby, there was no violation of Rules or the Notification with intention to evade duty. The Commissioner(Appeals) was not justified in imposing penalty. When he has clearly noted that they have obtained permission from the Department and the Department had condoned the delay in exporting the goods. Once the delay has been condoned, the question of imposing penalty does not arise, more especially, when exports have been completed. He submits that for every violation, penalty is not imposable as held by the Supreme Court in the case of Hindustan Steel Limited Vs. State of Orissa 1978 (2) ELT J159(SC). He also relies on the judgment of Supreme Court rendered in CCE, Aurangabad Vs. Balakrishna Industries 2006 (201) ELT 325(SC) wherein it has been held that penalty is not imposable when differential duty is not leviable. Similar view was expressed by the Supreme Court in the case of CCE Vs. HMM Ltd. 1995 (76) ELT 497(SC). He also relies on the following Tribunal rulings.
(i) P.G.R. Industries Vs. CCE, Coimbatore 2005 (186) ELT 354(Tri.-Chennai)
(ii) Vaspar Concepts (P) Ltd. Vs. CCE, Bangalore 2006 (199) ELT 711(Tri.-Bang.)
(iii) KCP Limited Vs. CCE, Guntur 2004 (168) ELT 325(Tri.-bang.)
3. The learned JDR submits that there is a violation of the Notification in not exporting the goods within six months and, therefore, penalty was leviable.
4. As can be seen from the impugned order itself, the appellants had intimated about the export of goods and it also prayed for condonation of delay in exporting the goods. The same had been received by the Divisional Officer and the proof has been accepted. When this is the position, the
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question of proceeding to impose penalty does not arise. There is no deliberate intention on the part of the appellants to violate the Notification to cause Revenue loss. As held by the Apex Court in the cited judgment, penalty is not leviable when there is no confirmation of duty. In view of these judgments, the imposition of penalty is set aside and appeal is allowed with consequential relief, if any.