2013 (10) TMI 847 - AT - Central Excise

Tribunal grants stay on duty demand, interest, penalty pending final appeal decision

M/s Swati Exim Pvt. Ltd. Versus CCE & ST, Noida

The Tribunal granted the appellant's stay application, setting aside duty demand, interest, and penalty imposition until the final appeal decision. The ... Diversion of export Goods OR Not – Waiver of Pre-deposit – Held that:- The goods had been cleared on 10/5/11 for export under bond - According to the appellant these goods could not be exported, as the buyers representative in pre-shipment inspection rejected the consignment as the same was not as per their quality specifications - According to the appellant for this reason only, the goods were returned to the factory - a consignment of the garments was available in the factory and the Jurisdictional Range Officer after inspecting the same has given a report that those goods are in accordance with the description given in the invoices, but still he has said that it cannot be proved that the goods available in the factory are the same as the goods cleared - the appellant did not intimate the return of the goods within 24 hours, the fact remains that they have produced Transport company’s GR and as such no inquiry has been conducted with the transporter - there was a consignment of Kaftans available in the factory which appeared to be covered by the export invoice - the appellant have a prima facie case in their favour - The requirement of pre-deposit of duty demand, interest and penalty waived for hearing of the appeal and recovery stayed - stay granted. Issues:1. Duty demand on allegedly diverted goods cleared for export under ARE-1.2. Failure to inform the department promptly about the return of rejected goods.3. Discrepancies in producing original and duplicate copies of ARE-1.4. Dispute regarding the identity of goods returned to the factory.5. Appeal against duty demand, interest, and penalty imposition.Analysis:1. The appellant, a manufacturer of readymade garments, cleared a consignment for export under ARE-1 but the buyer's representative rejected the goods for not meeting quality requirements. The appellant returned the goods to the factory, and the department was informed later. A show cause notice was issued for duty demand, interest, and penalty alleging illicit diversion. The Assistant Commissioner confirmed the demand, which was upheld by the Commissioner (Appeals), leading to the current appeal.2. The appellant argued that the goods were returned due to quality rejection, supported by the transporter's GR. They contended that the duty demand was unjust as the goods were not illicitly diverted, despite the delay in informing the department about the return of goods. The appellant sought a waiver from pre-deposit and stay on recovery during the appeal.3. The department opposed the stay application, highlighting the failure to inform within 24 hours, inability to produce original ARE-1 copies, and discrepancies in the documents. The Range Officer's report also raised doubts about the identity of the returned goods matching the exported ones, supporting the duty demand confirmation.4. The Tribunal observed that while the appellant did not meet the 24-hour notification requirement, they provided the transporter's GR as evidence. The Range Officer confirmed the goods in the factory matched the invoice description, but uncertainty remained about their identity with the exported goods. Considering these factors, the Tribunal found a prima facie case in favor of the appellant, waiving the pre-deposit requirement and staying the recovery pending appeal.5. The Tribunal allowed the stay application, setting aside the duty demand, interest, and penalty imposition until the appeal's final decision. This decision was based on the appellant's argument regarding the return of goods due to quality rejection and the lack of conclusive evidence linking the goods in the factory to those cleared for export under ARE-1.