2019 (12) TMI 116 - AT - Central Excise

Recovery of Duty on the Readymade Garments exported - demand on the ground that the appellant did not follow the procedure of Notification No. 42 of 2001-CE (NT) dated 26.06.2001 by preparing ARE-1 as provided in Annexure-14 Part-7 of CBEC manual - levy of penalty - principles of natural justice - HELD THAT - The government has prescribed a simplified procedure particularly for those units who are not clearing their goods in home consumption but entire production is exported. In this regard various circulars were issued from time to time. It is observed that as regard the readymade garment, there is a specific circular No. 705/21/2003-CX dated 8.04.2003 was issued. According to which the appellant was suppose to follow the simplified procedure as prescribed in the said circular that means the appellant was not required to follow the procedure as prescribed under Notification 42/2001-CE (NT). Therefore, the demand only on the basis that the appellant have not followed the procedure prescribed under Notification 42/2001-CE(NT) will not sustain. However, in any case the exports of goods have to be established. In the present case there is no much dispute raised as regard export of goods. Also, the appellant by Miscellaneous Application submitted some vital documents which were obtained under RTI, after the Adjudication Order was passed. Those documents were not considered while passing the Adjudication Order. Since the veracity of these documents needs to be verified on factual background, which can be done by the Adjudicating Authority - Therefore, the matter needs to be remanded to the Adjudicating Authority - appeal allowed by way of remand to the Adjudicating Authority for passing a fresh order.

Summary

Issues:
- Demand of duty on exported Readymade Garments
- Applicability of Notification No. 42/2001-CE (NT)
- Denial of simplified procedure for export clearance
- Invocation of extended period for demand of Excise Duty

Analysis:

Issue 1: Demand of duty on exported Readymade Garments
The appeal challenged the Order confirming duty demand on Readymade Garments exported by the appellant from March 2011 to February 2013. The demand was based on non-compliance with the procedure of Notification No. 42/2001-CE (NT) by not preparing ARE-1 as specified in the CBEC manual.

Issue 2: Applicability of Notification No. 42/2001-CE (NT)
The appellant argued that the simplified procedure prescribed by the Board in a Circular dated 8.4.2003 was applicable to them as an exporter of Readymade Garments, even though the Adjudicating Authority held it was only for SSI units. The contention was that the appellant, being a registered SSI unit, was entitled to the benefit of Notification No. 8/2003-CE, and the demand of duty was unjustified.

Issue 3: Denial of simplified procedure for export clearance
The Tribunal noted that a specific circular (No. 705/21/2003-CX) was issued for Readymade Garments, allowing a simplified export procedure different from that under Notification No. 42/2001-CE (NT). The Tribunal was of the view that the demand based solely on non-compliance with the latter notification was not sustainable, especially when there was no significant dispute regarding the actual export of goods.

Issue 4: Invocation of extended period for demand of Excise Duty
The appellant contended that the invocation of the extended period for the demand was not justified, as there was no intent to evade duty and no loss to the revenue. The Tribunal agreed that if the export of goods was established, the demand of Excise Duty would not be sustainable, even if the prescribed procedure under Notification No. 42/2001-CE (NT) was not followed.

The Tribunal set aside the impugned Order and remanded the matter to the Adjudicating Authority for a fresh decision, emphasizing the need to consider the additional documents submitted by the appellant post the Adjudication Order. The issue of limitation was also left open for further examination.