2011 (11) TMI 336 - AT - Central Excise

Manufacturer of spring and exporting the same against letter of undertaking - Non- submission of statement in Annexure 19 along with relevant documents in terms of para 13.2 of Chapter VII (Export without payment of duty) of the Supplementary Instructions, 2005 read with Rule 19 of Central Excise Rules 2002 and notification No. 42/2001 CE(NT) dated 26.6.01. - penalty imposed under Rule 27 Held that - Rule 27 provides for imposition of general penalty for breach of Central Excise Rules, 2002. Inasmuch as non-filing of the submissions in Annexure 19 was not the requirement in terms of said Rules. Further, information required to be filed in Annexure 19 was in any case available to the Revenue, as such, it remains only a technical or venial breach of provisions of rules, not resulting in any revenue loss to the exchequer. Thus, penalty imposed under Rule 27 is not justified.- Decided in favor of assessee.

Summary

Issues:
1. Allegation of non-submission of required statement and documents for export of goods.
2. Imposition of penalty under Rule 27 for non-compliance with instructions in Annexure 19.
3. Interpretation of Rule 31 empowering issuance of instructions consistent with Act and Rules.
4. Justification of penalty based on technical breach without revenue loss.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi addressed the issue of non-compliance with submission requirements for the export of goods, leading to the imposition of a penalty under Rule 27. The appellant, a manufacturer of springs, exported goods against a letter of undertaking but failed to submit the statement in Annexure 19 along with relevant documents as alleged by the revenue. The Commissioner (Appeals) reduced the penalty from Rs. 10,000 to Rs. 5,000, citing contravention of Supplementary Instructions, 2005 issued under Rule 31 of Central Excise Rules, 2002.

The appellant contended that filing information in Annexure 19 was not a legal or statutory requirement as per Rule 19 or notification No. 42/01-CE(NT) dated 26.6.01. The Tribunal analyzed Rule 31, which allows for instructions consistent with the Act and Rules and concluded that the instructions mandating Annexure 19 submissions were not in line with the Act and Rules. Since non-filing did not align with the Central Excise Rules, the penalty under Rule 27 was deemed unjustified.

Furthermore, the Tribunal noted that the required information in Annexure 19 was already available to the Revenue, making the breach technical and not resulting in revenue loss. Citing the Hindustan Steel Ltd. case, the Tribunal emphasized that the penalty of Rs. 5,000 under Rule 27 was unwarranted. Consequently, the penalty was set aside, and the appeal was allowed with consequential relief, disposing of the stay petition and appeal in the mentioned terms. The judgment highlighted the importance of aligning penalties with the specific provisions of the law and ensuring that penalties are proportionate to the offense committed.