2011 (8) TMI 639 - AT - Central Excise

Export - Appellant cleared sugar on CT-1 basis - Exporter diverted the goods to DTA - Held That - It was the duty of the Maritime Commissioner while issuing CT.1 certificate to ascertain whether the merchant exporter is a genuine exporter or not. As the appellants have cleared the sugar without payment of duty on the strength of CT.1 certificate, therefore, they cannot be held having mala fide intention to evade duty. We have also found that CT.1 certificate is a genuine certificate and it is not alleged that CT.1 certificate has been obtained by fraud. - No penalty.

Summary

Issues:
1. Imposition of penalty under Rule 25(d) of the Central Excise Rules, 2001 for diversion of goods meant for export to DTA.
2. Liability of the appellants for contravention of central excise law with intent to evade duty.
3. Validity of CT-1 certificate issued by the Maritime Commissioner for clearing goods without payment of duty.

Analysis:

1. The case involved the imposition of a penalty under Rule 25(d) of the Central Excise Rules, 2001 due to the diversion of goods meant for export to DTA. The appellants, sugar manufacturers, cleared sugar without payment of duty for export under a bond. However, investigations revealed that the goods were diverted to DTA instead of being exported. A show-cause notice was issued for penalty imposition. The appellants argued that they were not liable for penalty as the diversion was done by the merchant exporter. The Revenue contended that the appellants were involved in diverting the goods. The Tribunal found that the appellants cleared the goods based on a genuine CT-1 certificate and had no mala fide intention to evade duty. Therefore, the penalty imposition was set aside, and the appeal was allowed with consequential relief.

2. The issue of the appellants' liability for contravening central excise law with intent to evade duty was raised. The appellants argued that they had cleared the goods based on the CT-1 certificate issued by the Maritime Commissioner for export purposes, showing no intention to contravene the law. They relied on a previous decision to support their contention. The Revenue alleged that the appellants were involved in diverting the goods to DTA, thus contravening the law. The Tribunal found that the appellants acted in good faith based on the genuine CT-1 certificate and set aside the penalty imposition, holding that no penalty could be levied on the appellants.

3. The validity of the CT-1 certificate issued by the Maritime Commissioner was crucial in this case. The appellants cleared the goods without payment of duty based on this certificate. The Tribunal noted that the Maritime Commissioner should have verified the genuineness of the merchant exporter before issuing the CT-1 certificate. As the appellants relied on this genuine certificate and there was no allegation of fraud in obtaining it, the Tribunal held that the appellants could not be deemed to have mala fide intentions to evade duty. Therefore, the penalty imposition was set aside based on the authenticity of the CT-1 certificate, and the appeal was allowed with any consequential relief.