Export condition breaches attracted penalty, but absence of intent to evade duty blocked harsher excise consequences.

CESTAT Mumbai held that contravention of export conditions by failing to submit proof of export and delaying export of goods cleared under bond attracted Rule 25(1)(d) of the Central Excise Rules, 2002, but the record did not establish suppression with intent to evade duty. On that basis, the harsher penalty regime under Section 11AC of the Central Excise Act, 1944 was not justified, and the penalty could not be made automatically equal to the duty short paid merely because a breach was found. Penalty remained leviable, but was confined to a lower amount reflecting the nature of the contravention.

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Issues: Whether penalty under Rule 25(1)(d) of the Central Excise Rules, 2002 was attracted for non-submission of proof of export and delayed export of goods cleared under bond, and whether the penalty could be sustained at the level equivalent to the duty short paid.

Analysis: The goods were cleared for export under the prescribed procedure and the failure was in respect of submission of proof of export and timely completion of export. The Tribunal held that the appellant had committed contraventions of the export conditions, but the record did not justify a finding of suppression with intent to evade duty so as to attract Section 11AC of the Central Excise Act, 1944. The Tribunal further held that the circumstances did not warrant treating the penalty as automatically equal to the duty merely because violation was established. While Rule 25(1)(d) was applicable, the quantum had to reflect the nature of the contravention and the absence of ingredients necessary for invoking the harsher penalty regime.

Conclusion: Penalty was leviable, but not at the amount originally imposed or restored by the Revenue; it was restricted to Rs. 5,00,000/-.

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