2015 (2) TMI 1093 - AT - Central Excise

Validity of Letter of Undertaking - whether the CBEC Manual of supplementary instructions issued under Rule 31 shall prevail ; over the notification issued by the CBEC or not - Held that - by issuing a circular a new condition thereby restricting the scope of the exemption or restricting or whittling it down cannot be imposed. - appellant is not required to file details as per annexure 19 to special instruction and as such the letter of undertaking cannot be declared invalid by the lower authorities. Therefore I set aside the impugned order - Decided in favour of assessee.

Summary

Issues: Validity of letter of undertaking based on non-compliance with filing requirements as per special instructions issued under Rule 31.

The appellant, a manufacturer exporter, appealed against the lower authorities' decision to declare their letter of undertaking (LOU) invalid due to non-compliance with filing requirements specified in special instructions under Rule 31. The adjudicating authority noted that the appellant failed to submit a statement in the specified form along with original export documents as required by the special instructions. The appellant argued that as per notification No. 42/01, there was no obligation to file details as per annexure 19, and only the chief Commissioner had the power to issue supplementary instructions under Rule 31. The appellant relied on a Supreme Court decision and a Tribunal decision to support their contention that the special instructions could not override the notification. On the other hand, the respondent contended that the special instructions issued under Rule 31 were mandatory and needed to be followed. The key issue was whether the special instructions issued under Rule 31 would prevail over the notification issued by the CBEC.

The Tribunal analyzed previous legal precedents, including a Supreme Court judgment, and its own decision in a similar case where a penalty for non-filing of Annexure 19 was dropped. The Tribunal concluded that the special instructions requiring filing in Annexure 19 were not consistent with the Act and Rules, and as such, the penalty imposed was not justified. The Tribunal also noted that the information required in Annexure 19 was already available to the Revenue, and the non-compliance did not result in any revenue loss. Therefore, the Tribunal held that the appellant was not obligated to file details as per annexure 19, and the LOU could not be declared invalid based on non-compliance with the special instructions. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.