2016 (8) TMI 703 - HC - Central Excise

Demand of duty, interest and penalty - export of goods without payment of duty under letter of undertaking - failure to submit a proof of export within a period of six months - Held that - the authorities, after undertaking the process of adjudication under Section 11AF of the Central Excise Act, imposed penalty as the petitioners failed to pay the interest also. It is disclosed that CENVAT credit is taken by the petitioners after furnishing the proof of export. There is no dispute between the parties that the duty has been debited correctly and the authenticity of the export is established and proof of export has been accepted by the Department. No provision is pointed out which lays down the consequences of imposition of penalty and interest on non submission of proof of export. - Decided in favour of appellant

Summary

Issues:
1. Quashment of the order passed in revision application confirming the order by the Commissioner (Appeals) Central Excise and Customs.
2. Export of goods under Notification No. 42/2001 within the stipulated period.
3. Submission of proof of export within six months.
4. Imposition of penalty and interest for failure to submit proof of export.
5. Interpretation of statutory provisions regarding penalty and interest.

Analysis:

Issue 1:
The petitioner sought quashment of the order confirming the Commissioner's decision regarding the export of goods under the Excise Department's policy. The Revenue alleged that the petitioner exported goods without duty payment and failed to submit proof of export within six months, resulting in the imposition of interest and penalty under Section 11AF of the Central Excise Act, 1944.

Issue 2:
The petitioner contended that despite failing to submit proof within the stipulated period, the duty was correctly debited, and the authenticity of the export was established. Citing the judgment in "Mangalore Chemicals and Fertilizers Vs. Deputy Commissioner," the petitioner argued for acceptance of the proof of export.

Issue 3:
The respondent emphasized the necessity of submitting proof of export within six months for the authority's satisfaction. Failure to provide such proof hindered the determination of duty payment and export timing. Referring to the judgment in "Kedarnath Jute Manufacturing Co. Vs. Commercial Tax Officer," the respondent stressed the importance of satisfying the authority regarding proof of export.

Issue 4:
The court noted the petitioner's failure to submit proof of export within the specified period, leading to the imposition of penalty and interest after adjudication under Section 11AF. Despite subsequent acceptance of proof and correct duty debiting, no provision was identified regarding the consequences of non-submission of proof of export.

Issue 5:
Referring to the judgment in "Mangalore Chemicals," the court highlighted the distinction between substantive statutory provisions and procedural aspects. Consequently, the court quashed the impugned judgments and ruled in favor of the petitioner, emphasizing the need to differentiate between substantive and procedural provisions.

In conclusion, the High Court quashed the impugned judgments, ruling in favor of the petitioner, emphasizing the need to distinguish between substantive statutory provisions and procedural requirements.