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TMI Blog2020 (1) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... o 42/2001 CE(NT) dtd 26.06.2001 and the procedure laid down thereto. (iii) The Merchant Exporter should also pay the interest as appropriate on such duty from the date of removal for export from the place of procurement till the date of payment of duty in terms of B-1 bond (General) read with clause 2(v)(b) of Notification No 42/2001 CE (NT) dtd 26.06.2001 as amended, read with Section 11 (AB) of C Ex Act, 1944. (iv) I impose a penalty of Rs. 75,00,000/- (Rupees Seventy Five Lakhs only) on M/s Shivnath Rai Harnarain (India) New Delhi under the provisions of Rule 26 of Central Excise (No 2) Rules, 2001. 2.1 Appellant is a Merchant Exporter having "Star Trading House" status. He has executed B-1 bond, as indicated in table below for removal of sugar for export from various factories located in various jurisdiction. Since they are "Star Trading House", the bonds were executed without any security. The quantum of sugar removed for export and quantum of duty involved on such removals is also as indicated. Appellant was not able to produce the "proof of export " within the period as prescribed in respect of the goods cleared by them for export without payment of duty as per Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07 directed them to make a pre-deposit of Rs. 50 Lakhs. Against this order of CESTAT, appellant filed appeal before Mumbai High Court. Mumbai High Court has vide its order dated 29.02.2008 held as follows: "2. Similarly by another order of 31st December, 2005 pertaining to another sugar factory (in respect of other than 3 sugar factories which are subject matter of the earlier appeal) set aside the order with the direction to obtain decision of the Board and thereafter to proceed in the matter. 3. The Board thereafter by its Order No. 17/2006-Central Excise dated 16th June, 2006 directed consolidation of four show cause notices as set out in the order. Grievance of the petitioners is that the Board has not consolidated all the show cause notices which were required to be consolidated so that an effective order could be passed. We now find that in respect of the show cause notice issued to M/s. Sant Tukaram S.S.K. Ltd., Kasarsai it is kept in the D.C. Pune Division and in case of M/s. Daulat S.S.K. Ltd., the documents are kept pending with A.C. (Bond) Mumbai - for finalization of proof of export order of consolidation is yet to be passed. In case any other show cause noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Pune-II. 2.5 Since the main grievance of the appellants in earlier proceedings before all the authority was that during the period under consideration they had exported sugar cleared not only from these unit, but from 13 units located in Maharashtra, and hence the clearances made from all the thirteen units should be taken into record and reconcile. Accordingly Commissioner has considered the documents pertaining to all the 13 units. He records in para 3 of the order as follows: "I have considered the documents pertaining to the clearances of sugar from all the 13 units mentioned by M/s SRH while passing the order." 2.6 Commissioner ahs in para 5 of the impugned order recorded as follows: "5 The above five show cause notices are issued because of irreconcible deficiencies and discrepancies between the various documents namely AR-4/ARE-1, Shipping Bill, Bill of Lading, Invoices, Bank Realization Certificate etc. which have been produced by the noticee for acceptance of proof of export. Broadly, these discrepancies can be categorized as under: (i) Original and duplicate AR-4/ ARE-I with the Customs endorsement not produced. (ii) The country of destination s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him certifying the actual export. * Whatever goods were cleared for Mumbai Port under ARE- 1s of different Sugar Mills were ultimately exported under 198 SBS (197 from Mumbai + 1 from Amritsar under which destination has been changed to Pakistan). On comparison of the gods cleared under these ARE-1s and exported under 198 Shipping Bills, only the 272 MT cannot be reconciled (approx 220 Grams per Quintal) which is due to handling wastage during re-packing of the same. * Band Realization Certificate (BRC) has also been produced in respect of 196 SBs and only in respect of two SBs accounting for 350 MT the BRC are not available and not produced. * Demand has been confirmed under Annexure "A" of impugned OIO on the basis of non production of Original copy of Original and Duplicate ARE-1s, photocopies of same duly by Customs have been produced. Hon'ble Mumbai High Court has in the matter of M/s U M Cables [2013 (293) ELT 641 (Bom)] held that demand could not have confirmed merely for the reason that original of original and duplicate copy of ARE-1s have not been produced. * Demand has been confirmed under Annexure "B" of impugned OIO on the basis that the ARE-1s were endorsed wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the point of time when they could have done so had elapsed and they could not be permitted to comply with Rule 56A after that stage had passed." * They would also rely on the decisions as follows in their support * Continental Cement Company[2014 (309) ELT 411 (ALL)] * Arya Fibres Pvt Ltd [2014 (311) ELT 529 (T-Ahmd)] * Model Buckets & attachments (P) Ltd [2007 (217) ELT 284 (T-Bang)] affirmed at {2014 (300) ELT 510 (Kar)] * They are in possession of SBs and BRC evidencing the exports. Adjudicating authority has himself recorded that the goods were repacked at the port, thus admits that the goods had reached the port. * Hon'ble Apex Court has in case of Suksha International & Nutan Gems & Anr [1989 (39) ELT 503 (SC)] and A V Narasimhalu [1983 (13) ELT 1534 (SC)] stated the administrative authorities should instead of relying on technicalities, act in a manner with broader concept of justice. * In interest of justice the matter should be remanded back to adjudicating authority for reconsideration. 3.3 Arguing for the revenue learned Authorized Representative while reiterating the findings recorded in the impugned order submitted that:- * From 2002 onwards it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions there is no merits in the submissions made by the appellants to the effect that the benefit of exemption under Notification No 42/2001-CE (NT) should be admissible to them by tallying the entire quantity exported against the Shipping Bills produced by them which tallies with the total quantity of sugar cleared from the 13 different sugar mills located in Maharashtra. 4.1 We have considered the impugned order along with the submissions made in appeal, during the course of arguments and in written submissions filed. 4.2 The three annexures as per which the demand has been confirmed against the appellant by the adjudicating authority are reproduced below: Annexure A (to the OIO No 2/CEX/2010 in r/o of M/s Shivnath Rai Harnarain, New Delhi) List of AR-4/ ARE-1 whose original and Duplicate copies endorsed by Customs officer not produced in respect of- S No AR-4/ ARE-1 No/ Date Quantity Removed ' Qtls Duty Demanded 'Rs (a) M/s S M S M P SSK Ltd 1 14/15.07.2001 9970 8,47,450 2 15/16.07.2001 7481 6,35,885 3 20/23.07.2001 8140 6,91,900 4 24/28.07.2001 11440 9,72,400 5 37/14.08.2001 7640 6,49,400 Total 37,97,035 (b) M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s available on shipping bill No 5153885 dated 10.07.2001 the actual shipment was taken place on 12.07.2001. The relevant Mate Receipt No 3701 dated 17.07.2001 indicated the date of receipt of the consignment on Board the vessel on 17.07.2001. 6 25/29.07.2001 922.7 7,84,295 The actual removal of the sugar from the registered factory was on 29.07.2001 whereas the relevant shipping bill No 5156864 dated 23.07.2001 indicated that the shipment of the consignment on 24.07.2001. Mate Receipt not produced 7 32/09.08.2001 1167.3 9,92,205 The actual removal of the sugar from the registered factory was on 09.08.2001 whereas the relevant shipping bill No 5147417 dated 26.07.2001 indicated that the shipment of the consignment on 27.07.2001. The Mate Receipt No 1835 dated 03.08.2001 indicated the date of receipt of the consignment on Board the vessel on 03.08.2001. 8 35/12.08.2001 632 5,37,200 The shipping bill No 5140660 dated 16.05.2001 and 5157332 dated 27.07.2001 indicated that the sugar was originally procured from the jurisdiction of Hyderabad Commissionerate. Further the removal of the sugar from the registered factory was on 12.08.2001 whereas the relevant shipping bill in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugar from the registered factory was on 06.08.2001 whereas the relevant shipping bill Nos 5140660 dated 16.05.2001 indicated that the shipment of the consignment on 26.07.2001.Furt her the relevant shipping bill indicated that the sugar was originally procured from the jurisdiction of Division I Hyderabad Commissionerate 11,74,615 (c) M/s Gadhinglaj SSK Ltd 1 11/12.04.2001 1200 10,20,000 Let export allowed on the S B is 07.04.2001 and the sugar removed from factory on 12.04.2001 2 12/13.04.2001 1066.4 9,06,440 Let export allowed on the S B is 07.04.2001 and the sugar removed from factory on 13.04.2001 Total 19,26,440 Annexure B - Grand Total (a) + (b) + (c) = 1,00,43,430/- Annexure B (to the OIO No 2/CEX/2010 in r/o of M/s Shivnath Rai Harnarain, New Delhi) Showing mis match between Shipping documents and AR-4/ ARE-1 Sri Sant Tukaram SSK Ltd Part-II (List of Shipping Bills AR-4 wise) Sr No S Bill No/ Date as per AR-4 Quantity of Sugar as S/Bill MT AR-4 No/ Date Quantity indicated in AR-4 MT BRC Date Remark if any 1 5148727/ 18.06.2001 850 1/ 2.5.01 250 9.8.01 Hyderabad 2 546813/ 11.06.2001 1884.8 4/ 9.5.01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material may be removed without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, for use in the manufacture or processing of goods which are exported, as may be approved by the Commissioner. (3) The export under sub-rule (1) or sub-rule (2) shall be subject to such conditions, safeguards and procedure as may be notified by the Board." 4.4 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. The said relevant excerpts of the notification are reproduced below: "In exercise of the powers conferred by sub-rule (3) of rule 19 of the Central Excise (No.2) Rules, 2001, the Central Board of Excise and Customs hereby notifies the conditions and procedures for export of all excisable goods, except to Nepal and Bhutan without payment of duty from the factory of the production or the manufacture or warehouse or any other premises as may be approved by the Commissioner of Central Excise, namely: - 1. Conditions: - 1. that the exporter shall furnish a general bond in the Form sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not exceed the credit available therein at any point of time; (c) the manufacturer-exporter may remove the goods without payment of duty after furnishing the letter of undertaking as specified under condition (i). (d) such General bond or letter of undertaking shall not be discharged unless the goods are duly exported, to the satisfaction of the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise or Maritime Commissioner or such other officer as may be authorised by the Board on this behalf within the time allowed for such export or are otherwise accounted for to the satisfaction of such officer, or until the full duty due upon any deficiency of goods, not accounted so, and interest, if any, has been paid. (ii) Sealing of goods and examination at place of despatch. - (a) .....; (b) .....; (c) ......; (d) .....; (e) ...... (iii) Dispatch of goods by self-sealing and self-certification. - (a) ........; (b) ........; (c) ........; (d) ....... (iv) Examination of goods at the place of export. - (e) On arrival at the place of export, the goods shall be presented together with original, duplicate and quintupl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified in the bond, they had to furnish the proof of export of the goods cleared to the authority with whom the bond had been executed or were required to pay the duty on the goods with interest @ 24% in case of failure to furnish the proof of export in manner as has been prescribed by the Notification, to the satisfaction of bond accepting authority. 4.6 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. (Refer para 2.3 and 2.4, supra). 4.7 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 for the reasons as stated in the three Annexures to the impugned order reproduced in para 4.2 supra. 4.8 It is now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export case (supra) stands overruled." 4.9 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. In case of Mihir Textiles [1997 (92) ELT 9 (SC)] Hon'ble Supreme Court while rejecting such arguments stated the law as follows: "11. Learned counsel for the appellant raised an alternative contention that the deficiency in the contract for obtaining the concessions should not have been taken so seriously and the Customs Authorities should have granted the reliefs as the appellants had performed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56A of the Central Excise Rules, 1944 was held to be insufficient to deny the benefit of a notification to the assessee. But the said benefit was afforded on the special circumstances of a case as could be seen from the following words : "The circumstances in which the appellants did not pay the duty on the intermediary product before putting the same to the captive consumption for producing that stage, the appellants contested the correctness of the classification and had, therefore, not paid the duty on the intermediary product. When it was found that they were liable to pay duty on the intermediary product and had not paid the same, but had paid the duty on the end product, they could not ordinarily have complied with the requirements of Rule 56A." Nor can we find support from the ratio in B.O.I. Finance Ltd. v. The Custodian & Others, JT 1997 (4) 15, that "infringements of the instructions issued by the Reserve Bank of India under the Banking Regulations Act prohibiting the banks from entering into buy-back arrangements do not invalidate such contracts entered into between the banks and it's customers", as it involved a question of invalidation of the contract. Here neit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rebate claim. In such a case, it is open to the exporter to demonstrate by the production of cogent evidence to the satisfaction of the rebate sanctioning authority that the requirements of Rule 18 of the Central Excise Rules, 2002 read together with the notification dated 6 September, 2004 have been fulfilled. As we have noted, the primary requirements which have to be established by the exporter are that the claim for rebate relates to goods which were exported and that the goods which were exported were of a duty paid character. We may also note at this stage that the attention of the Court has been drawn to an order dated 23 December, 2010 passed by the revisional authority in the case of the Petitioner itself by which the non-production of the ARE-1 form was not regarded as invalidating the rebate claim and the proceedings were remitted back to the adjudicating authority to decide the case afresh after allowing to the Petitioner an opportunity to produce documents to prove the export of duty paid goods in accordance with the provisions of Rule 18 read with notification dated 6 September, 2004 [Order No. 1754/2010-CX, dated 20 December, 2010 of D.P. Singh, Joint Secretary, Go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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