TMI BlogPROCEDURAL LAPSEX X X X Extracts X X X X X X X X Extracts X X X X ..... PROCEDURAL LAPSE - By: - Mr. M. GOVINDARAJAN - Central Excise - Dated:- 11-8-2015 - - Rules are made by the Government to carry out the objectives of the main Act. The rules prescribe the procedures to be complied with. The lapse in complying with the procedures will attract penal provisions of the Act and the Rules. For example if the service tax payable is not deposited within 6 th of the following month it would attract interest. If there is intention to evade payment of service tax then the Revenue would confirm the demand of tax along with interest and equal penalty on the assessee. Mandatory requirement to be complied with If the procedure is mandatorily complied with then there will be no condonation unless specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions are under the relevant law for this purpose. In re Abicor Binzel Production (India) Private Limited 2012 (8) TMI 896 - GOVERNMENT OF INDIA the applicant has given various reasons for filing rebate claim after the stipulated period of one year. In addition he contended that delay in filing rebate claim is a procedural lapse and same may be condoned as the substantial benefit cannot be denied to them due to procedural infractions. In this regard, Government observed that filing of rebate claim within one year is a statutory requirement which is mandatorily to be followed. The statutory requirement can be condoned only if there are such provisions under Section 11B. The application has to be treated as time barred. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In re Kariwala Green Bags 2013 (5) TMI 791 - GOVERNMENT OF INDIA it was held that Rule 30 (15) of Special Economic Zone Rules, 2006 stipulates the procedure for procurement of goods and services from another unit located in same Special Economic Zone. Since inter-unit transfer of materials is permitted subject to the compliance of laid down procedure, as such violation if any can be treated a procedural condonable lapse, which cannot be a reason or to deny substantial benefit like drawback. But in this case the respondent has not produced relevant records for verification by the Assistant Commissioner of Customs. Therefore in the absence of valid documentary evidence regard proper maintenance of record for utilization of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials, the claim of respondent cannot be accepted. In re Copper Pharma Limited 2013 (6) TMI 679 - GOVERNMENT OF INDIA the declaration of input and out has neither been filed before processing and export of goods nor any expost facto approval is granted by the competent authority. In such a situation the use of duty paid inputs in the manufacture of exported goods cannot be determined correctly. As such the input rebate claim is right held inadmissible by lower authorities. Condonable lapse Procedure has been prescribed to facilitate verification of substantive requirement. As long as a fundamental requirement is met other procedural deviation can be condoned. In Mangalore Chemicals and Fertilizers Limited V. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deputy Commissioner 1991 (8) TMI 83 - SUPREME COURT OF INDIA it was held that the procedural infraction of Notification, Circulars etc., are to be condoned if exports have already taken place and the law is settled now that substantive benefit cannot be denied for procedural lapse. In re Lallubhai Amichand Limited 2011 (7) TMI 1094 - GOVERNMENT OF INDIA the assessee has filed declaration as required under Notification No. 21/2004-CE (NT), dated 06.09.2004 as amended, for Aluminium sheets for which the input-output ratio was approved by the Assistant Commissioner, Central Excise, Division II, Ahamedabad I. However the assessee did not use Aluminium sheets instead had used aluminium circles, for which neither any decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration was filed nor was any permission taken. As the assessee has not complied with the conditions, it was held that the rebate under Rule 18 of Central Excise Rules is not admissible. However the Government held that since the respondent has followed the laid down procedures except the lapse pointed out above the input-output ratio in respect of inputs Aluminium Circles can be worked out based on the relevant data. Moreover the SION norms notified in terms of EXIM policy also guide about input-output ratio of particular items. The Government held that rebate can be allowed in terms of SION norms unless there are specific reasons for variation as stated in para 3.2. of Para V of Chapter 8 of CBE C Central Excise Manual on Supple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentary instructions. Minor Procedural lapse Minor procedural lapse is condonable if the substantial requirement is complied with. In Re Cipla Limited 2013 (9) TMI 996 - GOVERNMENT OF INDIA, the rebate claim of duty paid on exported goods pertaining to 2 central excise invoices was disallowed since the applicant failed to submit duplicate copy of the invoice. The Government notes that the export of duty paid goods is not disputed by the Department in this case. As per para 8.3 of Part I of Chapter 8 of CBE C Excise Manual of Supplementary instructions one of the documents required to be enclosed with rebate claim is invoice issued under Rule 11 of Central Excise Rule, 2002 . It does not specify that only duplicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of invoice is to be produced as notified in the Mumbai III Committee Trade Notice No. 2/2006, dated 22.03.2006. In this case the applicant has submitted original invoice since duplicate copy is misplaced. It was held that the substantial benefit of rebate claim cannot be denied for mere minor procedural lapses. This lapse can be condoned. The Government set aside the impugned order and remands the case back to the original authority for fresh consideration of rebate claim in accordance with law by taking into account the above observations. In re Agio Pharamaceuticals Limited 2013 (6) TMI 686 - GOVERNMENT OF INDIA the Government held that there is no dispute of duty or export of duty of goods registered in warehouse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Rule 9 of Central Excise Rules, 2002. Goods were cleared from factory under Central Excise supervision and ARE-1 signed by both partners endorsed by Customs and the Central Excise authorities stated that the goods exported, shipping bills and substantial conditions of Notification No. 19/2004- CE (NT), dated 06.09.2004 and Rule 18 of Central Excise Rules, 2002 were complied with. Rebate cannot be denied for minor procedural infraction. In re Socomed Pharma Private Limited 2015 (3) TMI 862 - GOVERNMENT OF INDIA the applicant has exported medicaments from supporting manufacturer under various ARE 1 on payment of duty. The applicant filed rebate claims of excise duty paid on the goods along with supporting d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocuments. The original authority sanctioned the claim. The Revenue filed appeal against the order on the ground that the applicant has ticked in the declaration in the impugned ARE- 1 that they are availing benefit of 21/2004-CE (NT), dated 06.09.2004 and Notification NO. 43/2001-CE (NT), dated 26.06.2001 however they failed to follow the mandatory provisions under the said notifications. In the appeal the original order was set aside. In the present application the applicant contended that once the applicant has cleared the export consignment and if he has erroneously ticked in pre-printed declaration of ARE-1 the same cannot be the ground for rejecting the claim. The Government held that minor procedural infraction cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a denial of rebate claim where substantial compliance of provisions of notification and rules made by claimant. The Government set aside the impugned order Clerical mistake In re Usan Pharmaceuticals Private Limited 2013 (6) TMI 677 - GOVERNMENT OF INDIA the Government observes that para 8 of CBE C Manual of Supplementary instructions stipulates that the rebate can be sanctioned by Deputy Commissioner/Assistant Commissioner having jurisdiction over the factory of production of export goods or the warehouse; or Maritime Commissioner and the exporter has to indicate on the ARE-1 at the time of removal of export goods with which they intend to file claim of rebate. In this case they have mentioned in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ARE-1 the address of Maritime Commissioner, Thane as rebate sanctioning authority. The goods covered Vide 5 ARE 1 was exported from JNCH, Nhava Sheva and ACCE Raigarh who is the Maritime Commissioner for export through Seaport Nhava Sheva, is the sanctioning authority. The Government considered that there is a force in the pleading of the respondent that this is a clerical mistake in wrong mentioning of rebate sanctioning authority in 5 ARE-1 and same may be condoned. In this case the exports of goods are not in dispute. Department has also not challenged the admissibility of rebate claims to the applicant on merit. Hence in this case fundamental conditions of claiming rebate stands complied with. It was held that the reba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te claim in respect of these 5 ARE-1 allowed by the Commissioner (Appeals) is in order and the same cannot be faulted with. Procedural and technical lapse In Aum Aluminium Private Limited V. Commissioner of Central Excise, Vadodora 2012 (4) TMI 557 - CESTAT AHMEDABAD the Tribunal found that the Commissioner confiscated some of the goods from the factory of the appellant for their non accountal in RG-1 Register along with imposition of penalty of ₹ 8 lakhs. There is nothing on record to show that the said goods were not entered in RG-1 register with an intention to remove the same without payment of duty. As such the Tribunal found that non entry in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the records remains a procedural and technical lapse, which requires lesser redemption fine and penalty. Omission If there is any omission on the part of the assessee in complying with the procedure then such In Metallic Bellows (I) Private Limited V. Commissioner of Customs, Chennai 2011 (2) TMI 1357 - CESTAT CHENNAI the appellants filed shipping bills for the export of metallic expansion bellow under the category of free shipping bills. After the export was over, they filed letter to the Department stating that they had taken Advanced Licence and that there was a procedural lapse on their side in not indicating the licence number in the shipping bills filed by the exporter and the same has taken place as they are not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regular exporter. The Original Authority did not accept the conversion and the decision were upheld by Commissioner (Appeals). The Tribunal held that the reason for non mentioning the advance licence and for not claiming export benefit under the scheme, while filing the shipping bill is not convincing. The Department contended that if the bill was filed under the scheme Customs authorities were required to conduct examination of the consignment particularly to look for nexus between the inputs and the products which were actually exported. The Tribunal observed that this submission deserves to be taken into account as the goods covered under free shipping bills were not subject to examination. Therefore the Tribunal held that the om ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission could not be condoned as the same involved danger to the Revenue. Procedural defect In Commissioner of Central Excise V. Shriram Textiles 2013 (10) TMI 352 - CESTAT AHMEDABAD the Review order was signed by the Commissioners on different date. The authorization given by the Committee of Commissioners does not give reason for filing of appeal but the grounds of appeal give reasons as to why order was not acceptable. The Tribunal held that the procedural defect if any gets rectified when detailed reasons accompanied in the grounds of appeal. If the defect is curable, the appeal should be allowed. - Reply By Mahir S as = Sir, There is also one more major type of procedure Law known as Substantive Procedure. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Substantive Law Procedure is concerned with the ends with administration of justice seek, while Procedural Law deals with the means and instruments by which these ends are to be attained. Substantive Law should be construed/interpreted strictly, while Technical / Procedural Law should be interpreted liberally. Further, the following paras have also been mentioned in the Supreme Court judgement in Mangalore Chemicals Fertilizers Ltd. v. Deputy Commissioner , which has been quoted above :- that non-compliance of a condition which is substantive and fundamental to the policy underlying the grant of an exemption would result in an invalidation of the claim . Further, in case of M/s Vee Excel Drugs Pharmaceuticals Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Vs Union Of India Ors ., 2014 (1) TMI 1340 (All.), Allahabad High Court held as under:- 24. It also cannot be doubted that ignorance of law is no excuse to follow something which is required to be done by law in a particular manner. It is well established that when law requires something to be done in a particular manner, any other procedure adopted or the procedure deviated or not followed would be illegal inasmuch as, one has to proceed only in the manner prescribed under law. 31. It is no doubt true that the provision has been made for the benefit of exporter but simultaneously, it also cannot be overlooked that the Government of India has also to lay down the procedure which will discourage mischievous and scrupulous per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons in indulging in any mischief. At every stage, officials of respondents-authorities would come into picture to verify the exact commodity etc. which is sought to be exported in respect whereof rebate is being claimed. This is to verify that the goods actually exported are same of description, value etc., as claimed. Thus, any procedure lapse therefore are not required to be treated as just mere normal and technical lapse but it is an Inbuilt Mechanism which allows the department to know and to verify, (if required), the facts and genuineness of any activity undertaken by the assessee at relevant time. Dated: 14-8-2015 - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... india - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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