Custom, Excise & Service Tax Tribunal
Cce, Bangalore vs M/S. Shree Pla Pvt. Ltd on 9 March, 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench SMB
Court I
Date of Hearing: 09/03/2010
Date of decision:09/03/2010
Appeal No.E/636, 501/08; E/CO/276/08; E/CO/01/2010
(Arising out of Order-in-Appeal No.183/2008-CE dt. 19/5/2008; No.129/2008-CE dt. 27/3/2008 passed by
Commissioner(Appeals), Bangalore)
For approval and signature:
Honble Mr. M.V.Ravindran, Member(Judicial)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3.
Whether their Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
CCE, Bangalore
..Appellant(s)
Vs.
M/s. Shree Pla Pvt. Ltd.
Respondent(s)
Appearance Ms. Joy Kumari Chander, Jt.CDR for the Revenue.
Mr. K.K.Varrier, Conculstant for the respondent.
Coram:
Honble Mr. M.V.Ravindran, Member(Judicial) FINAL ORDER No._______________________2010 Per M.V.Ravindran These two appeals are directed against Order-in-Appeal No.183/2008-CE dt. 19/5/2008; No.129/2008-CE dt. 27/3/2008. Respondents have also filed cross-objections in both the case which are numbered as E/CO/276/08 and E/CO/01/2010.
2. The case is regarding the enhancement of the penalties imposed on the respondents by the lower authorities. The relevant facts that arise for consideration are that the respondent had cleared goods for export under ARE-1 to units of SEZ. The said ARE-1s were cleared by the authorities below. The lower authorities have proceeded against the assessee on the ground that the assessee had not furnished LUT as required under Notification No.42/2001-CE(NT) dt. 26/6/2001 read with Rule 19 of Central Excise Rules, 2002., wherein procedure and condition are stipulated for clearance without payment of duty. The adjudicating authority in both the cases have imposed penalties under Rule 27 of the Central Excise Rules, 2002. On an appeal, the appellate authority has upheld the imposition of penalty under Rule 27. Revenue is seeking for imposition of penalty under Rule 25 and enhancement in both these appeals.
3. Ld. DR reiterated the grounds of appeal, which are reproduced below:-
a) The assessee had cleared the goods to SEZs vide ARE1 SL.No.001/2006-07 to 15/2006-07, without payment of duty or without executing bond as required under the said SEZ Rules, 2006.
b) Rule 30 of the SEZ Rules 2002 (As amended) prescribe the procedure for procurement from domestic Tariff Area. Sub Rule 1 of Rule 30 allows the domestic tariff area supplier supplying the goods to a unit or developer to clear the goods, as in the case of exports either under bond or under claim of Rebate. Further Rule 30(3) specifies that-the goods procured by a unit or Developer under claim of export entitlements shall be allowed admission in to the SEZ on the basis of ARE-1 and a Bill of Export filed by the supplier or on his behalf by the unit or developer and which is assessed by the authorized officer before arrival of goods.
c) When an assessee intends to avail any benefit or exemption from payment of duty, it is required on his part to follow the procedure laid down in the relevant Rules and also should fulfill the conditions laid down for such clearances. In the instant case, in order to clear the goods to SEZ or to export, the conditions laid down the Rule 19 and the Notification issued there under the conditions he cannot claim the benefit and is required to pay the duty.
d) As per Rule 25 of CER 2002, if any manufacturer, removes any excisable goods in contravention of nay of the provisions of these rules or the notifications issued under these rules; then all such goods shall be liable to confiscation and the manufacturer shall be liable to a penalty not exceeding the duty on the excisable goods or rupees ten thousand, whichever is greater.
e) In the instant case, though the contravention is proved and the duty is demanded on the removal of excisable goods, the adjudicating authority has erred in wrongly invoking the penal provisions and has imposed the penalty under Rule 27 of CER 2002. As per Show cause notice, the penalty was proposed under Rule 25 of CER 2002; therefore the adjudicating authority has traveled beyond the Show Cause Notice.
f) The Commissioner Appeals has not appreciated the fact that the goods were cleared to SEZ without payment of duty without furnishing the necessary Bond/ Letter of Undertaking as required under Rule 19 of the CER, 2002 and the Show Cause notice was issued rightly demanding the Central Excise duty under Sec. 11 A and invoking the provisions relating to demand of Interest under Sec. 11 AB of the CEA 1944 as this is a case of violation of Rules by the assessee.
g) The Commissioner Appeals has not appreciated the contention of the Department with regard to violation of the Provisions of the Rule 19 relating to execution of Bond or furnishing Letter of Undertaking to cover the obligation of payment of duty in respect of goods which are cleared without payment of duty for export or for SEZ units within the country. The adjudicating authoritys findings with regard to violation of Rules, that is, clearance of excisable goods to SEZ without furnishing Letter of Undertaking UT1), has not been appreciated by the Commissioner Appeals in the foresaid OIA. Further the fact of violation of statutory provisions has also been accepted by the Assessee, thereby rendering them liable for penal action in terms of Rule 25 of the Central Excise Rules, 2002.
h) As the present Order of the Commissioner (Appeals) is passed keeping in view the OIA No. 129/08 dt. 27.03.2008, and also since both orders are arising out of the same order -in - original, this appeal is filed before the Honble Tribunal, with a prayer to merge both the appeals for decision in respect of OIA Nos. 129/2008 dt. 27.03.2008 and OIA No. 183/2008 dt. 19.05.2008.
4. Ld. Consultant appearing on behalf of the respondent/assessee submitted that the imposition of penalty of Rs.5000/- itself is incorrect and should not have been imposed upon them. It is his submission that the fact that the goods have been cleared to SEZ is not disputed and the supplies were made to SEZ immediately when the rule in 2002 introduced and hence duty cannot be demanded for non-furnishing of LUT. He would rely upon the decisions of the Tribunal in the case of MERRY Vs. CCE, Mumbai-II [2008(226) ELT 422(Tri. Mum.)], Eves Fashions Vs. CCE, Delhi-I [2006(205) ELT 619 (Tri. Del.)], and in IOC Ltd. Vs. CCE, Calcutta-II [2004(178) ELT 834 (Tri. Kol.)].
5. I have considered the submissions made at length by both sides and perused the records. I find that the ld. Commissioner(Appeals) has recorded the following findings for non-imposition of penalty under Rule 25 and for upholding the penalty under Rule 27:-
.. .. The appellant has followed procedure prescribed under Rule 30 of SEZ Rules, 2006 and the goods cleared to SEZ units under ARE-1s have been rewarehoused as evidenced from the endorsements on ARE-1s by jurisdictional Customs officer. Thus I find from the records except for non-furnishing of letter of undertaking all other procedures prescribed for clearance of goods to SEZ units have been complied with by the appellant. The adjudicating authority has not made out any case that the endorsement on the ARE-1s by the Customs authorities having admitted the goods in full in SEZ unit is wrong and erred in confirming duty and interest. There is violation of Rule 19 of Central Excise Rules, 2002 by not furnishing letter of undertaking and delay is submitting re-warehousing certificate which are only procedural lapses. Nevertheless, violation of procedures prescribed should not be treated as fit to be automatically condoned. The statutory procedures are prescribed to ensure proper functioning of substantive provisions and therefore contravention invites suitable penalty, though clearly, the penalty should be commensurate with the offence. In this case the substantial requirement of export proof is not controverted by the department; suitable penalty for procedural infringement will suffice. Thus imposition of penalty under Rule 27 of Central Excise Rules 2002 sustains. .
6. As against the above reproduced portion of the order, it can be seen that the Revenues contention, in the grounds of appeal is only to the extent that there is no proper procedures have been followed. It is also on record that the goods have been cleared by the respondent/assessee, in this case under ARE-1 with the permission of the lower Revenue authorities. It is also undisputed that the ARE-1s were warehoused as per the endorsement of the recipient of the ARE-1. It would indicate that the goods cleared from the factory premises of the respondent/assessee reached the SEZ which is considered as an export. I find that the imposition of penalty of Rs.5000/- under Rule 27 for not following the procedure is correct and does not require any interference. I find that the order of the ld. Commissioner(Appeals) is correct and legal and does not suffer from any infirmity. Appeals filed by the Revenue are dismissed.
7. As regards the cross-objections filed by the respondent that there are no show cause notice for the proposition of imposition of penalty under Rule 27 of Central Excise Rules. On this point, the arguments for setting aside the penalty imposed under Rule 27 under the Central Excise Rules, by the Counsel are not convincing and their arguments that the provisions of said rule is not invokable. Accordingly, cross-objections filed by the respondent are also dismissed.
(Operative portion of the order pronounced on conclusion of the hearing) (M.V.Ravindran) Member (Judicial) Nr 7