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2010 (3) TMI 995 - AT - Central ExciseImposition of penalty u/r 25 - goods for export under ARE-1 to units of SEZ - penalty on the ground that the assessee had not furnished LUT as required under N/N. 42/2001-C.E. (N.T.), dated 26-6-2001 read with Rule 19 of CER, 2002, wherein procedure and condition are stipulated for clearance without payment of duty - Held that - the imposition of penalty of ₹ 5,000/- u/r 27 for not following the procedure is correct and does not require any interference - penalty upheld - appeal dismissed - decided against Revenue.
Issues:
Enhancement of penalties imposed on respondents by lower authorities under Rule 27 of Central Excise Rules, 2002. Appeal for imposition of penalty under Rule 25 and enhancement in both cases. Compliance with SEZ Rules, 2006 and Rule 30. Non-furnishing of Letter of Undertaking (LUT) under Rule 19. Proper procedure for clearance of goods to SEZ units. Imposition of penalty under Rule 27 upheld by Commissioner (Appeals). Cross-objections filed by respondent regarding imposition of penalty under Rule 27. Analysis: Issue 1: Enhancement of penalties under Rule 27 The case involves the imposition of penalties on the respondents by lower authorities under Rule 27 of the Central Excise Rules, 2002. The penalties were imposed for the non-furnishing of Letter of Undertaking (LUT) as required under Notification No. 42/2001-C.E. (N.T.), dated 26-6-2001 read with Rule 19 of Central Excise Rules, 2002. The appellate authority upheld the imposition of penalties under Rule 27. The Revenue sought for the imposition of penalties under Rule 25 and enhancement in both cases. The key contention was whether the penalties imposed under Rule 27 were justified or if penalties under Rule 25 should have been applied. Issue 2: Compliance with SEZ Rules and Rule 30 The case also revolved around the compliance with Special Economic Zone (SEZ) Rules, 2006 and Rule 30 regarding the procedure for procurement from the domestic Tariff Area. The respondents cleared goods for export to SEZ units under ARE-1 without payment of duty or executing a bond as required under SEZ Rules. The respondents argued that they followed the prescribed procedure under Rule 30 of SEZ Rules, 2006, and all procedures for clearance to SEZ units were complied with except for the non-furnishing of the Letter of Undertaking (LUT) as required under Rule 19. The dispute centered on whether the procedural lapses warranted penalties under Rule 27. Issue 3: Imposition of penalty under Rule 27 upheld The Commissioner (Appeals) upheld the imposition of penalties under Rule 27, stating that while there were procedural lapses, the substantial requirements for export were met. The Commissioner emphasized that contravention of statutory procedures should invite suitable penalties, with penalties commensurate with the offense. The Commissioner found that the penalties under Rule 27 were justified in this case. The Tribunal concurred with the Commissioner's decision, dismissing the appeals filed by the Revenue. Issue 4: Cross-objections regarding imposition of penalty under Rule 27 The respondents filed cross-objections challenging the imposition of penalties under Rule 27, arguing that there was no proper show cause notice for such penalties. However, the Tribunal found the arguments against the imposition of penalties under Rule 27 unconvincing and upheld the penalties imposed. The cross-objections filed by the respondents were also dismissed. Overall, the Tribunal upheld the imposition of penalties under Rule 27, emphasizing the importance of compliance with procedural requirements and statutory provisions in excise matters. The case highlighted the significance of following prescribed procedures for clearance of goods to SEZ units and the consequences of non-compliance with excise rules and notifications.
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