Consequences - export during lapse period

[Asked by Guest]

If a manufacturer exporter fails to renew his LUT for 3 months. But he exports goods during the lapse period. He renews the LUT after 3 months. IS there any consequences for the exports made during the particular 3 months ( where the LUT is not convered those 3 months)

Dear Sir, Export under bond (or LUT) is a major trade- facilitation measure which is allowed as per policy decision on not to export taxes. But furnishing of bond or LUT is one of the essential conditions in the Notification No. 42/2001-CE (N.T.), dated 26-06-2001 issued under Rule 19 of C.E.Rules,2002. It cannot be regarded as merely procedural because, removal of goods without payment of duty cannot be made without safegurding revenue interest in order to prevent mis-use of the facility. For an assessee who is engaged in exports regularly, non-furnishing of bond or LUT cannot be considered as due to ignorance. But such a mistake can be condoned only by bodies like CESTAT. In the case of Eves Fashions v Commissioner [2006 (205) E.L.T. 619 (Tri. - Del.) it was held that duty and penalty confirmed on ground of non-furnishing of bond or letter of undertaking (LUT) was not sustainable when duly attested photocopies of shipping bill(EP-Copy) B/Lading and Foreing Exchange Remittance Certificate or BRC were submitted within 180 days from the date of LEO as mentioned on the S/Bills. Generally, when export is proved duty demand may not sustain. In my opinion submission of proof of export is must and non furnishing of LUT condonable when proof of export provided. Best Regards Pradeep Khatri Indirect Tax Consultant e-mail: - [email protected]

[Mukesh Kumar]

i see no reason to disagree with the views expressed by Mr. Pradeep Khatri.

[Devang Shah]

Sir,

we are LUT renewal lapse two month and during the period we export under without duty paid and LUT number mention on ARE 1 previous LUT number. we are in fault ? if we submit total proof of export document submit excise authority within 180 days. any suggestion or advise to us with any case study regarding said Issue.

AI Summary

Failure to renew LUT may invite duty and penalty, but timely submission of proof of export can avert a demand.
Non-furnishing or lapse of a bond or LUT is an essential condition for duty-free removal of goods and can give rise to duty and penalty; however, where the exporter submits satisfactory proof of export (attested shipping bills, bill of lading, foreign exchange remittance evidence) within the prescribed period, revenue demands for non-furnishing may not be sustained and tribunals may condone the lapse.