2024 (6) TMI 1323 - AT - Central Excise

Clearance of goods for export without payment of duty in contravention of the conditions laid down in N/N. 42/2001-CE(NT) dated 26.6.2001 - failure to furnish / renew LUT - non-submission of the LUT - HELD THAT - The SCN has not questioned the actual export of the goods but only the non-submission of the LUT for the relevant period. Post the export, certain documents are stated to have not been furnished by the appellant for verification as per the Order in Original. It is found that the charge of non-submission of documents was not an allegation mentioned in the SCN and the Ld. Original Authority and the Ld. Commissioner Appeals cannot travel beyond the allegations made out in the SCN and improve their case. Once the fact of the Export of the goods was not questioned, the confirming of demand along with interest and imposing an equal penalty under sec. 11AC of the Central Excise Act, 1944, for a procedural lapse was too harsh and not warranted. The ends of justice will be served by setting aside the fine and penalties imposed by the impugned order - the impugned order is set aside - Appeal allowed.

Summary

Issues:
- Non-submission of Letter of Undertaking (LUT) for export clearance without payment of duty
- Demand of duty and interest for goods exported without a valid LUT
- Imposition of penalty under sec. 11AC of the Central Excise Act, 1944 for procedural lapse
- Allegations of non-submission of documents post-export

Analysis:

Issue 1: Non-submission of LUT for export clearance without payment of duty
The case involved the appellant, a manufacturer of MS/SS castings, who exported goods without payment of duty but failed to renew the LUT for a specific period. The Central Excise officers issued a Show Cause Notice demanding duty not paid for the goods exported without a valid LUT. The appellant argued that the export was proven through documents like ARE-1s, invoices, and ER-1 returns, and the non-renewal of the LUT should not deny the substantive benefit of export. The Tribunal noted that the SCN did not question the actual export of goods, only the non-submission of the LUT, and held that post-export document submission was not an allegation in the SCN.

Issue 2: Demand of duty and interest for goods exported without a valid LUT
The original authority and the appellate Commissioner confirmed the demand for duty and interest, along with imposing an equal penalty under sec. 11AC of the Central Excise Act, 1944. However, the Tribunal found that penalizing for a procedural lapse, when the fact of export was not in question, was too harsh. Citing the Apex Court's judgment, it emphasized that laws of procedure should aid justice and not foreclose adjudication on substantial rights.

Issue 3: Imposition of penalty under sec. 11AC for procedural lapse
The Tribunal referred to the Hon’ble Supreme Court's decision in Hindustan Steel Ltd. vs. State of Orissa, highlighting that penalties should be imposed judiciously, considering all relevant circumstances. In this case, since the fact of export was not disputed, the Tribunal set aside the penalties imposed by the impugned order, aligning with the principles of justice and discretion in penalty imposition for statutory obligations.

Issue 4: Allegations of non-submission of documents post-export
The Tribunal emphasized that the authorities cannot go beyond the allegations in the SCN to enhance the case. Quoting a Constitution Bench judgment, it stressed the importance of procedure in assisting real justice. As the Tribunal found no questioning of the export of goods, it set aside the penalties, emphasizing that justice would be served by not penalizing for a procedural lapse when the substantive export had taken place.

In conclusion, the Tribunal set aside the impugned order, granting the appellant consequential relief as per law, based on the principles of procedural justice, substantive rights, and judicial discretion in penalty imposition.