2014 (3) TMI 1049 - HC - Central Excise

Demand of duty and imposition of penalty - Failed to produce original and duplicate copies of AREs-1 duly endorsed by the customs as a proof of export - Export consignment cleared for which proof of exemption was not allegedly submitted in time and excisable goods were removed without payment of duty under cover of invalid letter of undertaking (LUT) - Held that - insistence on the proof of exports is understood. However, the insistence on production of ARE s and terming it as a primary one has not been supported in law. Mr. Shah is therefore justified in criticizing the revisional authority on the ground that the authority was oblivious of execution of other documents and particularly in respect of the clearance of goods under bond/LUT. If there is adequate proof of exports then, non-production of ARE-1 would not result in the allegations being proved and the demand being confirmed. There is no question of penalty being imposed in such a case as well and without verification of the records. The penalty could have been imposed had there been absolutely no record or no proof of any export. The approach of the revisional authority therefore, is not in conformity with law as laid down in UM Cables Limited v. Union of India 2013 (5) TMI 459 - BOMBAY HIGH COURT . In the present case, the fundamental issue has not been examined and the order suffers from a patent error. It is also suffering from clear perversity and in not referring to the contents of the documents which are forming part of the two letters. If the two letters they point towards Bill of Lading and equally the commercial invoice, shipping bill. Mr. Shah would urge that the confirmation of payment by buyers is on record. Then, the Revisional authority should have expressed an opinion thereon and whether that has any impact on the claim made by the Department. That having not done, the Revisional authority failed to exercise its jurisdiction vested in it in law. The Revisional order deserves to be quashed and set aside. - Decided in favour of petitioner by restoring revision application

Issues involved:
Challenge to order by revisional authority, imposition of penalty and duty confirmation, grounds for Revision Application, rejection of Revision Application, insistence on production of proof of exports, interpretation of primary documents, conformity with law, examination of fundamental issue, quashing and setting aside of impugned order, restoration of Revision Application for fresh decision.

Detailed Analysis:

Challenge to order by revisional authority:
The petitioner challenged the order passed by the revisional authority dated 12-3-2012, which dismissed the Revision Application filed by the petitioner. The Revision Applicant contested the order dated 1-9-2009 of the Commissioner of Central Excise (Appeals) Mumbai Zone-I, which dealt with four orders-in-original passed by different Assistant Commissioners.

Imposition of penalty and duty confirmation:
The petitioner's goods were alleged to be exempted, but show cause notices were issued demanding duty for export consignments where proof of exemption was not submitted on time. Additionally, excisable goods were reportedly removed without payment of duty under an invalid letter of undertaking (LUT). The original authority confirmed the duty demand and imposed penalties on the petitioners, leading to a challenge before the Commissioner of Central Excise (Appeals).

Grounds for Revision Application and rejection:
The Revision Application under Section 35EE of the Central Excise Act, 1944 was filed on various grounds, including the alleged failure to produce original and duplicate copies of AREs-1 as proof of export. The revisional authority rejected the Revision Application primarily on the grounds of non-submission of statutory documents, specifically customs-endorsed ARE-1 forms.

Insistence on production of proof of exports:
The petitioner's counsel argued that while proof of exports is necessary, the insistence on producing certain documents alone as primary proof was unwarranted. Non-production of ARE-1 forms should not automatically result in duty payment demands and penalties if there is adequate proof of exports through contemporaneous documents.

Interpretation of primary documents and conformity with law:
The Court found that the revisional authority erred in rejecting the Revision Application solely based on the non-submission of ARE-1 forms, without considering other supporting documents like commercial invoices, bills of lading, and shipping bills. The insistence on ARE-1 forms as the sole proof of export was deemed unjustified and not in line with legal precedents.

Examination of fundamental issue and quashing of impugned order:
The Court highlighted the importance of examining the fundamental issue of proof of exports and criticized the revisional authority for not considering all relevant documents before confirming duty demands. Consequently, the impugned order was quashed and set aside, and the Revision Application was restored for a fresh decision in accordance with the law.

Restoration of Revision Application for fresh decision:
The Court directed the revisional authority to reconsider the matter afresh within three months without being influenced by previous findings, emphasizing the need for an independent and lawful assessment based on the Court's directions.

This detailed analysis covers the various issues involved in the legal judgment delivered by the High Court, addressing the challenges faced by the petitioner regarding duty demands, penalties, and the interpretation of primary documents in the context of proof of exports.

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