2020 (1) TMI 636 - AT - Central Excise

Removal of sugar for export - Appellant was not able to produce the proof of export within the period as prescribed - Recovery alongwith interest and penalty - Benefit of N/N. 42/2001 CE (NT), 26.06.2001 - Star Trading House - HELD THAT - The goods are allowed clearance from the factory of manufacturer for exports in terms of Rule 13 of Central Excise Rules, 1944/ Rule 19 of Central Excise Rules, 2001. The Rule 13 of Central Excise Rules, 1944 is pari materia to Rule 19 of Central Excise Rules, 2001 - In terms of sub-rule (3) of Rule 19, Board has issued notification No 42/2001-CE (NT) prescribing conditions, safeguards and procedure for allowing clearance of goods for export without payment of duty. In the present case as directed by the Hon ble Bombay High Court the matter of the exports under taken by the Appellants in respect of the goods cleared from various factories in Maharashtra was taken up by the common adjudicating authority appointed by the Board. The direction of the Bombay High Court is in respect of the consolidation of the proceedings initiated by various show cause notices in respect of the clearances made for export from the factories located in Maharashtra before common adjudicating authority - After considering the documents furnished by the appellant, adjudicating authority has demanded the duty in the cases where he was not satisfied with proof of export - We are also not in agreement with the submissions made by the appellant that they are not able to co-relate the documents in view of the certain erroneous method adopted by the Customs Authority while endorsing the documents. It is now settled position in law that any person claiming the benefit of an exemption notification is required to fulfill the conditions specified in the notification - It is also a settled position that when law requires something to be done in particular manner then that has to be one in that manner only and all other method of doing are barred. The view taken by the adjudicating authority in the impugned order in respect of Annexure B and C cannot be faulted with. However the view of the adjudicating authority in respect of ARE-1s in Annexure A is contrary to the decision of Hon ble Bombay High Court in para 16 and needs to be reconsidered - while upholding the demand made by the adjudicating authority in respect of the documents (ARE-1/ AR- 4) in Annexure B and C we set aside the demand confirmed in respect of Annexure A and remand the matter back to adjudicating authority for consideration of the same vis a vis the documents that may be furnished by the appellant. Appeal allowed in part by way of remand.

Issues Involved:
1. Enforcement of bonds against the appellant.
2. Confirmation of demand for Central Excise duty.
3. Payment of interest on such duty.
4. Imposition of penalty on the appellant.
5. Proof of export and discrepancies in documentation.

Issue-wise Analysis:

1. Enforcement of Bonds Against the Appellant:
The Commissioner directed that all relevant bonds be enforced against the appellant if the confirmed amounts of duty were not paid. The appellant, a Merchant Exporter with "Star Trading House" status, had executed B-1 bonds without any security for the removal of sugar for export from various factories. The issue arose due to the appellant's failure to produce "proof of export" within the prescribed period, leading to proceedings for recovery of unpaid duty under the executed bonds.

2. Confirmation of Demand for Central Excise Duty:
The Commissioner confirmed a demand for Central Excise duty amounting to ?3,15,73,845/- under erstwhile Rule 13 of the Central Excise Rules, 1944, or Rule 19 of the Central Excise (No 2) Rules, 2001, and Notification No 42/2001 CE(NT) dated 26.06.2001. The appellant had removed sugar for export without payment of duty but failed to provide satisfactory proof of export, leading to the duty demand.

3. Payment of Interest on Such Duty:
The Merchant Exporter was also required to pay interest on the duty from the date of removal for export until the date of payment, as per the B-1 bond (General) read with clause 2(v)(b) of Notification No 42/2001 CE (NT) dated 26.06.2001, and Section 11 (AB) of the Central Excise Act, 1944.

4. Imposition of Penalty on the Appellant:
A penalty of ?75,00,000/- was imposed on the appellant under Rule 26 of the Central Excise (No 2) Rules, 2001. The penalty was due to the failure to provide proof of export and discrepancies in the documentation.

5. Proof of Export and Discrepancies in Documentation:
The main issue was the appellant's inability to provide satisfactory proof of export for the goods cleared without payment of duty. The Commissioner identified several discrepancies, including:
- Non-production of original and duplicate AR-4/ARE-1 with Customs endorsement.
- Mismatched country of destination between AR-4/ARE-1 and shipping bills.
- Differences in packaging details between factory and shipping documents.
- Impossibility of shipment dates preceding clearance dates.
- Mismatched quantities between AR-4 and shipping bills.
- Non-production of Bill of Lading or Mate Receipts.

The adjudicating authority considered the documents provided by the appellant but found irreconcilable deficiencies, leading to the confirmation of the duty demand. The appellant argued that the goods were indeed exported, and discrepancies were due to errors by Customs authorities. However, the adjudicating authority upheld the demand based on the conditions specified in Notification No 42/2001-CE (NT).

Judgment and Remand:
The Tribunal upheld the demand made by the adjudicating authority in respect of Annexures B and C but set aside the demand confirmed in respect of Annexure A. The matter was remanded back to the adjudicating authority for reconsideration of the demand made under Annexure A and for re-determination of the penalty after taking into account the total demand confirmed in respect of Annexures B and C. The adjudicating authority was directed to decide the matter within four months, allowing a personal hearing to the appellants.

Conclusion:
The appeal was partially allowed, with the matter remanded for reconsideration of the demand under Annexure A and re-determination of the penalty. The adjudicating authority was instructed to complete the remand proceedings within four months.

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