2011 (10) TMI 183 - AT - Central Excise

Imposing Penalty - Assessee is an Exporter - Held - when no duty liability no penalty - omission with regard to LUT and ARE-1 are procedural lapse - when no allegation in show cause notice penalty cannot be imposed.

Summary

Issues:
- Penalty imposed under Rule 25 of the Central Excise Rules, 2002 without duty liability.

Analysis:
The appeal was directed against a penalty of Rs.10,000 imposed on the appellant under Rule 25 of the Central Excise Rules, 2002. The demand of duty was initially raised for goods cleared for export without certain required documents. However, the original authority dropped the demand after verifying the shipping bill and bank realization certificate as proof of export, considering the omission as a procedural lapse. The appellate authority imposed the penalty based on a Tribunal decision, holding the party liable under Rule 25 for contravention of export conditions. The appellant argued that no penalty should be imposed without duty liability and that they were not given a fair opportunity to defend against the penalty. The appellant also contended that since the basic export requirements were met, the penalty under Rule 25 was unjustified.

Upon review, the judge set aside the penalty. It was noted that the show-cause notice proposed a penalty under Section 11AC read with Rule 25, but no penalty under Section 11AC was imposed as the conditions for such penalty were not met. The judge emphasized that since the goods were exported with basic documents and the omission was considered a procedural lapse, no penalty under Rule 25 should be imposed. The decision to set aside the penalty was based on the lack of grounds for penalty imposition and the acceptance of the procedural lapse by the authorities. The judge allowed the appeal, overturning the penalty imposed under Rule 25.

In conclusion, the judgment focused on the lack of duty liability and the procedural lapse in exporting goods without certain documents. The judge emphasized that without meeting the conditions for penalty under Section 11AC, no penalty under Rule 25 should be imposed. The decision to set aside the penalty was based on the appellant meeting the basic export requirements and the acceptance of the procedural lapse as a non-punishable offense.