2018 (1) TMI 961 - AT - Central Excise

Rebate of duty - export of goods - it has been alleged that the appellants did not export the goods amounting to ₹ 2,53,670/- and it appeared that the same were cleared by them otherwise - Revenue entire case is based upon non-submission of bank realization certificate - Held that - Appellate Authority has himself arrived at a finding that there is no dispute regarding export of the goods and neither is there any allegation of short export of goods. If that be so, I fail to understand the reason for confirmation of demand - The demand of duty can be confirmed on the ground that appellant has not undertaken the export of the goods and as such allegedly diverted the goods to the local market in a clandestine manner - Once the Appellate Authority came to a conclusion that the goods have been exported, the very base for confirmation of demand of duty vanishes. Hon ble High Court in the case of Jubilant Life Sciences Ltd. vs. Union of India 2016 (11) TMI 316 - ALLAHABAD HIGH COURT has held that bank realization certificate has no link with the factum of export of the goods and non-submission of the same cannot be made, the basis for denial of the rebate of duty on the exported goods. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Allegation of non-export of goods and demand of Central Excise duty.
2. Imposition of penalty under Section 11AC of the Central Excise Act, 1944.

Issue 1: Allegation of non-export of goods and demand of Central Excise duty:
The appellants were engaged in manufacturing and exporting goods falling under specific Chapter Headings of the Central Excise Tariff Act, 1985. An allegation arose that the appellants did not submit proof of export for goods valued at a certain amount, which resulted in a demand show cause notice for recovery of Central Excise duty. The appellants failed to produce the required certificate of remittance, leading to the allegation that the goods were not exported as claimed. The adjudicating authority confirmed the demand of duty along with interest and penalty under relevant sections of the Central Excise Act, 1944.

Issue 2: Imposition of penalty under Section 11AC of the Central Excise Act, 1944:
The appeal against the order of the Original Adjudicating Authority was filed before the Commissioner (Appeals), who confirmed the demand of duty but set aside the penalty. The Appellate Authority observed that there was no deliberate attempt to evade payment of Central Excise duty by the appellants. The penalty was set aside based on the buyer's letter mentioning account debiting due to quality compensation and damages, indicating a dispute over payment. The Appellate Authority found no deliberate evasion but a discrepancy in payment receipt and duty interpretation, leading to the penalty being unjustified.

The Appellate Authority's finding that there was no dispute regarding the export of goods and no allegation of short export contradicted the confirmation of the duty demand. The order was deemed unsustainable as the base for confirming the duty demand vanished once export was established. Citing a relevant case law, it was highlighted that the non-submission of a bank realization certificate cannot be the sole basis for denying duty rebate on exported goods. As the Revenue's case relied solely on the absence of this certificate, the impugned orders were set aside, and the appeal was allowed in favor of the appellant.