Export violation penalties reduced under Customs Act, 1962. Appellant's regularization argument deemed insufficient.

The Tribunal upheld the decision that the appellant violated export norms by exporting sugar without a release order. Penalties were reduced to Rs. 20,00,000 for the company and Rs. 1,00,000 for the General Manager under the Customs Act, 1962. The appellant's argument of regularization by the Directorate of Sugar was deemed insufficient to negate the initial violation.

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Issues Involved:
1. Whether the export of 2496 MTs of sugar during July & August 2010 was contrary to any legal prohibition.
2. Whether the adjustment of export without proper release order by the Directorate of Sugar at a later date can be accepted as release of prohibition on the date of export.

Issue-wise Detailed Analysis:

Issue 1: Export of 2496 MTs of Sugar Contrary to Legal Prohibition

The appellant was issued an Advance Authorisation on 14-3-2005 to import raw sugar under actual user condition and imported raw sugar during 2005-2006. The Revenue alleged that the export of 2496 MT of sugar to the UAE during July-August 2010 was without a release order from the appropriate authority, violating the law. The appellant argued that the export was regularized by the Directorate of Sugar, adjusting the quantity against future release orders, and thus no violation occurred. They claimed that the export was done on a "grain-to-grain" basis, fulfilling the actual user condition as per the Foreign Trade Policy (2004-2009), which did not require a release order from the Sugar Directorate.

The Revenue contended that the exported sugar was not manufactured from the imported raw sugar and was not on a "Ton-to-Ton" basis, making it liable for confiscation and penalty. The adjudicating authority found that the appellant's export was made from indigenously manufactured sugar without a release order, violating the conditions of the export policy. The appellant's reliance on the "grain-to-grain" scheme was misplaced as the authorization was under the "Ton-to-Ton" basis, requiring a release order. The Directorate of Sugar's letter dated 23-6-2011 confirmed that the appellant's export without a release order was not permissible.

Issue 2: Adjustment of Export Without Proper Release Order

The appellant argued that the Directorate of Sugar allowed the past exports to be regularized by issuing subsequent release orders, and thus no penalty should be imposed. The Directorate's letter dated 23-6-2011 allowed the adjustment of 2496 MT against future release orders but did not absolve the appellant of the initial violation. The adjudicating authority concluded that the appellant's export without a release order was a deliberate violation of the law, and the subsequent regularization did not negate the need for a release order at the time of export.

Judgment Summary:

The Tribunal upheld the adjudicating authority's decision, confirming that the appellant violated the export norms by exporting sugar without a release order. The penalties imposed were revised as follows:

1. The penalty on the appellant company was reduced to an aggregate of Rs. 20,00,000/- under Sections 114(i) and 114AA of the Customs Act, 1962.
2. The penalty on Shri Mukesh Sharma, General Manager, was reduced to an aggregate of Rs. 1,00,000/- under Sections 114(i) and 114AA of the Customs Act, 1962.

The appeals were partly allowed to the extent of the reduced penalties.

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