2015 (11) TMI 1591 - AT - Central Excise

Demand - Penalty - Renewal of LUT - Notification No. 42/2001-C.E. (N.T.), dated 26.06.2001 - Held that - the said notification, it has been specified that the manufacturer-exporter may furnish the letter of undertaking in the form specified in Annexure-II in lieu bond. Nowhere in said notification, there is any mention that the LUT has to be renewed every year by the manufacturer-exporter - the instructions contained in the Excise Manual of Supplementary Instructions cannot over right the provisions of the said notification - Decided in favor of the assessee.

Summary

Issues:
1. Validity of the demand on the appellant due to non-renewal of Letter of Undertaking (LUT).
2. Imposition of penalties on the appellant and the Director of the Company.

Issue 1: Validity of the demand on the appellant due to non-renewal of Letter of Undertaking (LUT)

The case involved a manufacturer-exporter of steel who had furnished a Letter of Undertaking (LUT) under the Central Excise Rules, 2002, which was accepted by the authorities. However, the Department raised a demand on the appellant during a disputed period, citing non-renewal of the LUT annually as per the CBEC manual of supplementary instructions. The Central Government's notification No. 42/2001-C.E. (N.T.) prescribed conditions for export without paying Central Excise duty, allowing the manufacturer to furnish the LUT without specifying an annual renewal requirement. The Tribunal held that the supplementary instructions cannot override the notification's provisions, emphasizing that the absence of a specific renewal mandate in the notification meant the penalties imposed on the appellant were incorrect. Consequently, the impugned order confirming the penalties was set aside, and the appeals were allowed in favor of the appellants.

Issue 2: Imposition of penalties on the appellant and the Director of the Company

In the adjudication order, the Central Excise duty and penalties were confirmed against the appellant company, with a penalty also imposed on the Director of the Company. While the duty demand was set aside by the Commissioner (Appeals), the penalties were upheld in the impugned order. The Tribunal, after analyzing the legal provisions and the absence of a renewal requirement in the notification, concluded that the penalties imposed were not justified. Therefore, the penalties confirmed against the appellants were deemed incorrect and improper, leading to the setting aside of the impugned order and allowing the appeals in favor of the appellants.

This judgment highlights the importance of adhering to the specific provisions of legal notifications and regulations in determining the validity of demands and penalties in cases involving Central Excise duty and export procedures.