2017 (1) TMI 487 - AT - Central Excise

Tribunal grants refund for procedural lapse in export documentation, prioritizes substantive benefits

The Tribunal allowed the appeal, granting the appellant a refund of the disputed amount and any consequential reliefs. It emphasized distinguishing ... Refund claim - denial on the ground that there is no proof of export and that appellant cleared the goods without ARE-I, and thus failed to comply with the procedure prescribed in N/N. 42/2001-C.E. (N.T.), dated 26-6-2001 - Held that: - It is settled law that procedural infractions of notifications/circulars should be condoned if exports have really taken place. In the instant case, the Department has no case of fraud or mischief on the part of appellant. Further the appellant is a public sector undertaking. It is not the case of department, nor has it been disputed by them that the impugned goods have not actually been exported. This being so, the non-submission of an application for exporting the goods in ARE-I format will have to be treated as a procedural lapse which can be condoned - appellant eligible for refund - appeal allowed - decided in favor of appellant. Issues:Refund claim for duty paid on exported inputs; Reversal of credit due to wrong advice; Disallowance of refund by adjudicating authority; Appeal before Commissioner (Appeals); Upholding rejection of refund; Procedural lapse of non-production of ARE-I; Export on commercial invoices; Sufficiency of documents to prove export; Precedents on procedural lapses condonable for substantive benefits; Appellant's contention on denial of substantive benefit due to procedural lapse.Analysis:The case involved a refund claim for duty paid on inputs exported to Russia for missile integration by a Joint Venture Company. The appellant initially reversed the credit erroneously based on incorrect advice but later filed a refund claim for the reversed amount. The adjudicating authority allowed a partial refund but disallowed a portion due to non-compliance with the procedure prescribed in a notification. The Commissioner (Appeals) upheld the rejection of the refund, citing the absence of an ARE-I form for export clearance.During the proceedings, the appellant argued that the absence of the ARE-I form was a procedural lapse and should be condoned since all other supporting export documents were provided. The Department, however, relied on a judgment emphasizing the importance of duly certified copies of the ARE-I form for rebate eligibility. The appellant contended that the substantive benefit of refund should not be denied due to a procedural error, citing precedents where procedural lapses of a technical nature were condoned to ensure substantive benefits were not withheld.The Tribunal considered the distinction between procedural and substantive conditions, highlighting that procedural infractions should be condoned if exports genuinely occurred. The absence of fraud or mischief and the fact that the goods were actually exported supported the view that the non-submission of the ARE-I form was a procedural lapse that could be condoned. The Tribunal concluded that the appellant was eligible for the refund amount that was initially disallowed.In the final judgment, the Tribunal allowed the appeal, granting the appellant the refund of the disputed amount and any consequential reliefs. The decision emphasized the importance of distinguishing between procedural errors and substantive benefits, ensuring that genuine exports are not penalized due to technical lapses.