2016 (5) TMI 7 - HC - Central Excise

Export of goods - Failure to furnish ARE 1 and proof of export of goods as required under Rule 19 of the Rules - Manufacture and export of hand tools through merchant exporter who applied Form H - Availed benefit of Small Scale Industries Exemption notification dated 1.3.2003 - Held that - the impugned order was passed by the Joint Secretary to Government of India who was also Commissioner of Central Excise and Customs. Thus the order in appeal as well as revisionary order had been passed by the officers of the same rank which is not permissible as per law. Therefore the impugned order is set aside - liberty is granted to the State to proceed afresh in accordance with law - Decided in favor of assessee.

Summary

Issues involved:
Petitioner seeks to quash order rejecting revision application and upholding appeal order. Dispute over compliance with export procedure, duty payment, and penalty imposition. Challenge regarding revisional authority's rank and legality.

Analysis:

Issue 1: Revisional Authority's Rank
The petitioner challenged the revisional authority's rank, arguing that the officer who upheld the impugned demand and penalty and dismissed the appeal was of the same rank. Citing a judgment, the petitioner contended that revision by an officer of the same rank was impermissible. The Court referred to previous cases and held that revision by an officer of the same rank was not allowed. The impugned order was passed by a Joint Secretary to the Government of India, who was also the Commissioner of Central Excise and Customs, thus violating the law. The Court distinguished the judgments cited by the respondents, stating they were based on different fact situations and did not support their position.

Issue 2: Compliance with Export Procedure
The petitioner, engaged in manufacturing and exporting hand tools, availed exemption benefits but faced a duty demand due to alleged non-compliance with export procedure. The petitioner exported goods through a merchant exporter, failing to furnish required documents like ARE-1 and proof of export, as per Rule 19 of the Central Excise Rules. Despite executing a bond, the petitioner did not meet the conditions of the relevant notification, leading to a demand for duty payment and a penalty imposition. The Commissioner (Appeals) upheld the penalty and demand, emphasizing the need for compliance with export procedures. The revisional authority also dismissed the revision application, stating that the petitioner failed to follow the required procedure, being registered with the department and ineligible for simplified export procedures.

Issue 3: Legal Validity of Orders
The Court allowed the petitions, setting aside the impugned orders but granting the State the liberty to proceed afresh in accordance with the law, without prejudicing the rights of the parties. The judgment highlighted the impermissibility of revision by an officer of the same rank and emphasized the necessity for compliance with export procedures to avoid duty demands and penalties. The decision provided clarity on the revisional authority's rank and reiterated the importance of adhering to statutory requirements in export transactions to avoid legal repercussions.