Penalty for delayed re-warehousing proof to an SEZ was unsustainable absent any specific excise-rule contravention.

Penalty under Rule 25 of the Central Excise Rules, 2002 was held unsustainable where goods were cleared to a Special Economic Zone under Rule 30 of the SEZ Rules, 2006 and no specific contravention of the Central Excise Rules or the applicable penal sub-clause was identified. The record showed efforts to obtain re-warehousing certification, and there was no allegation of diversion to any other use. On these facts, mere delay in producing the re-warehousing proof did not justify penalty, and the assessee succeeded.

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Issues: Whether penalty under Rule 25 of the Central Excise Rules, 2002 was leviable for clearance of goods to a Special Economic Zone without timely production of re-warehousing proof.

Analysis: Rule 25 applies where there is contravention of the Central Excise Rules or notifications issued thereunder. The goods were cleared under Rule 30 of the Special Economic Zone Rules, 2006, and the adjudicating authority did not identify any specific contravention of the Central Excise Rules or indicate the sub-clause under which penalty was imposed. The record also showed that the appellant had attempted to obtain re-warehousing certification and there was no allegation that the goods were diverted for any other use. Mere failure to produce the certificate within time, in these circumstances, did not justify penalty.

Conclusion: Penalty under Rule 25 of the Central Excise Rules, 2002 was not sustainable and the assessee succeeded.

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