Government affirms Commissioner's decision on export compliance, prioritizing substance over procedure

Commissioner of Central Excise, Customs and Service Tax, Vapi Versus M/s Aarti Industries Ltd., Silvassa

Commissioner of Central Excise, Customs and Service Tax, Vapi Versus M/s Aarti Industries Ltd., Silvassa - TMI Issues Involved:
1. Non-submission of original and duplicate copies of ARE-1 forms.
2. Validity of the Letter of Undertaking (LUT) at the time of export.
3. Procedural compliance versus substantive compliance in export rebate claims.

Issue-Wise Detailed Analysis:

1. Non-submission of original and duplicate copies of ARE-1 forms:
The primary issue was the rejection of the rebate claim due to the respondent's failure to submit the original and duplicate copies of ARE-1 forms, which are mandatory documents as per para 8.3 and 8.4 of Chapter 8 of CBEC's Excise Manual of Supplementary Instructions and Notification No. 19/2004-CE(NT) dated 6.09.04. The Deputy Commissioner rejected the rebate claim based on this non-compliance. However, the Commissioner (Appeals) set aside this order, relying on collateral evidence such as the Mate Receipt, Shipping Bill, and Bill of Lading to establish that the goods were indeed exported. The Government of India, applying the ratio of the Bombay High Court judgment in the case of M/s U.M. Cables Ltd., upheld the Commissioner (Appeals)'s decision, stating that the rebate claim should not be rejected solely on the ground of non-submission of original and duplicate copies of ARE-1 forms if collateral evidence proves the export.

2. Validity of the Letter of Undertaking (LUT) at the time of export:
The department contended that the goods were not cleared under a valid LUT. However, this issue was not raised in the original revision application. The Government noted that since this issue was not part of the original revision application, it cannot be entertained at this stage. This highlights the procedural requirement that all grounds of contention must be included in the initial application.

3. Procedural compliance versus substantive compliance in export rebate claims:
The Government emphasized that export-oriented schemes like rebates and drawbacks should not be denied based on mere technicalities if the substantive fact of export is not in doubt. Citing various judgments, including the Supreme Court's decision in Suksha International vs. UOI, the Government stressed that a liberal interpretation should be given in cases of technical lapses, provided the core requirement of actual export is met. The Government reiterated that procedural infractions should be condoned if the substantive conditions, such as the actual export of goods, have been fulfilled. This principle was supported by numerous tribunal and Government of India decisions, which consistently held that substantive benefits cannot be denied for procedural lapses.

Conclusion:
The Government upheld the order of the Commissioner (Appeals), rejecting the revision application filed by the department. The decision reinforced the principle that procedural lapses should not overshadow the substantive compliance of export requirements, ensuring that the benefits of export-oriented schemes are not unduly restricted by technicalities.