2016 (4) TMI 981 - HC - Central Excise

Demand of duty and imposition of penalty - Violation of provisions of Rules 13 and 14 of the Central Excise Rules, 1944 - Failure to produce the proof of export within six months from the date of exportation in terms of Rule 14A - Held that - the assessee made very persuasive submissions on the basis of the question of burden of proof and the impropriety in calling upon the assessee to prove the negatives regarding the export that was covered by the documents, it is seen that a different conclusion could not have been arrived at by the authorities below on the basis of the materials on record. The version of the assessee was one which fundamentally stared at its non-managerial process. That by itself was insufficient to discharge the burden to show the reason for non-utilisation of documents relating to excise formalities, particularly when much before the show cause notice, there was no action taken by the assessee to inform the concerned authorities regarding non-availing and non-utilisation of the result of the formalities carried forward in anticipation of the export. The adjudicating authority, the first appellate authority and the CESTAT having concluded as aforenoted on the basis of the materials on record, we do not find any substantial question of law or any other material on the basis of which we could, through an appeal under Section 35G of the Central Excise Act, interfere at the instance of the assessee. - Decided against the assessee

Summary

Issues:
- Duty demand and penalty imposition for violation of Central Excise Rules regarding proof of export within six months.
- Burden of proof on the assessee regarding non-utilization of documents related to excise formalities.
- Adjudication by authorities and appellate bodies leading to dismissal of appeal under Section 35G of the Central Excise Act.

Analysis:
1. Duty Demand and Penalty Imposition: The appellant received a show cause notice proposing duty demand and penalty for failing to produce proof of export within six months as per Rules 13 and 14 of the Central Excise Rules. The appellant argued that the failure was due to mismanagement within its establishment, leading to the assembly of open market phones instead of export phones. Despite completing excise formalities, the proof of export was not submitted. The adjudicating authority held the appellant liable for duty and penalty, emphasizing the necessity of proof of export under Rule 14A. The appellate bodies, including CESTAT, upheld this decision based on the materials on record, disregarding the appellant's contentions regarding the non-utilization of export documents.

2. Burden of Proof: The appellant's senior counsel argued persuasively on the burden of proof and the impropriety of requiring the appellant to prove the negatives concerning the export covered by documents. However, the authorities below maintained their decision, stating that the appellant failed to discharge the burden of showing the reason for non-utilization of excise-related documents. The lack of timely communication regarding non-availing and non-utilization of formalities before the show cause notice contributed to the dismissal of the appellant's appeal. The courts found no substantial question of law or material warranting interference under Section 35G of the Central Excise Act.

3. Adjudication and Dismissal of Appeal: The High Court dismissed the appeal, affirming the decisions of the adjudicating authority, first appellate authority, and CESTAT. The court concluded that the appellant's version primarily blamed non-managerial processes, which was insufficient to justify the non-utilization of excise-related documents. Despite the appellant's arguments on burden of proof, the courts upheld the duty demand and penalty imposition based on the records. The appeal failed to present any grounds for intervention, leading to its dismissal under Section 35G of the Central Excise Act.