2015 (2) TMI 1217 - AT - Central Excise

Imposition of penalty - Rule 25 of Central Excise Rules - clearance of goods on execution of bond - it was alleged that the said bond was valid only for 12 calendar months from the date of execution of the bond and as such the validity of the said bond expired on 24-11-2005. A fresh bond was executed by the appellant only on 13-4-2007 and as such during the intervening period, there was contravention of provisions of Rule 19 of Central Excise Rules, 2002. Held that - No time-limit stand expressed in the bond or in the provisions of Rule 19. If as an administrative instruction, the bond has to be restricted to a period of 12 months, the jurisdictional officers of the appellant were well within their rights to direct the appellant to execute a new bond - Not only they did not do so but on the contrary they also allowed the assessee to keep on exporting the goods as against the executed bond. In such a scenario, it cannot be said that there was any mala fide on the part of the appellant not to renew the bond in time, so as to call for the penal provisions - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues: Penalty imposed under Rule 25 of Central Excise Rules for expired bond validity.

In this case, the appellant, a manufacturer of electronic goods, exported goods without duty under a bond/letter of undertaking. The issue arose when the appellant received a show cause notice alleging that the bond's validity had expired, leading to a contravention of Rule 19 of Central Excise Rules. The lower authorities imposed a penalty of Rs. 10,000 under Rule 25 of Central Excise Rules. The appellant argued that Rule 19 does not specify a 12-month validity period for the bond and that it was the duty of jurisdictional officers to direct the execution of a new bond if needed. The appellate tribunal noted that no time limit was expressed in the bond or Rule 19 and found the penalty imposed to be hyper-technical. The tribunal emphasized that if a 12-month restriction was an administrative instruction, the officers should have directed the execution of a new bond. Since the appellant was allowed to continue exporting goods against the bond without any mala fide intent, the penalty was set aside, and the appeal was allowed with consequential relief if any.

This judgment clarifies the importance of administrative instructions in bond validity periods and highlights the responsibility of jurisdictional officers to ensure compliance without penalizing on hyper-technical grounds. It underscores the need for clear communication and actions by authorities to avoid penalizing parties for inadvertent lapses in bond renewals.