2001 (11) TMI 466 - AT - Central Excise

Summary

Issues:
- Imposition of penalty under Rule 209A of the Central Excise Rules on the appellant.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved the question of whether a penalty under Rule 209A of the Central Excise Rules could be imposed on the appellant, Shri R.C. Mittal. The appellant, represented by Shri L.P. Asthana, argued that the Company he was associated with was engaged in the manufacture of stainless steel ingots and that the penalty imposed was unjust as the Company was only selling scrap of iron and steel. The appellant's advocate contended that there was no inquiry by the Department regarding the Modvat credit availed by purchasers of the scrap, and that both ingots and scrap were covered by the relevant notification allowing Modvat credit. It was further argued that for imposing a penalty under Rule 209A, the goods should be liable to confiscation, and since there was no specific finding by the Commissioner that the goods were liable for confiscation, the penalty could not be imposed on the appellants.

The Department, represented by Shri Jagdish Singh, countered these arguments by emphasizing that the Company had issued invoices with incorrect descriptions for goods not received, involving fictitious buyers with fake addresses. It was also alleged that the appellant had procured blank GR books through an employee of a transport company, indicating complicity in the matter.

After considering the submissions from both sides, the Tribunal held that the penalty under Rule 209A could be imposed on a person who knowingly deals with excisable goods liable for confiscation. However, in this case, the Tribunal found merit in the appellant's argument that Modvat credit was available for both ingots and scrap of iron and steel, and thus the appellant could not be attributed guilty knowledge. The Tribunal concluded that the Department had not established a case for imposing a penalty on the appellant and consequently set aside the penalty imposed on him.

This judgment highlights the importance of establishing specific grounds for imposing penalties under relevant rules, such as Rule 209A of the Central Excise Rules, and the necessity of demonstrating knowledge or complicity on the part of the accused party before penalties can be enforced.