2005 (5) TMI 395 - AT - Central Excise

Summary

Issues:
1. Imposition of penalty under Rule 209A of Central Excise Rules on Directors of a company for issuing bogus invoices.
2. Liability of Directors for penal action in cases of evasion of duty.
3. Resignation of a Director and its impact on liability for penal action.

Analysis:
Issue 1: The appellants, who were Directors of a company, filed appeals against a common adjudication order imposing penalties under Rule 209A of Central Excise Rules for issuing bogus invoices. The company had issued invoices without clearing goods, leading to the availing of unlawful credit by another company. The adjudicating authority confirmed the demand and imposed penalties on the Directors.

Issue 2: The Directors contended that they were only Directors on papers, with the real owner being someone else, and they did not participate in the management of the firm. However, the Tribunal found that during their tenure, the company issued invoices without clearing goods, leading to evasion of duty. The Tribunal held that the Directors were liable for penal action as they had participated in the management and actions of the company.

Issue 3: Regarding the resignation of one of the Directors, it was established that the Director had resigned before the period in dispute. As the Director was not part of the company during the relevant period, the Tribunal held that he could not be held liable for penal action. However, for other Directors who were actively involved in the management during the period in question, the Tribunal upheld the imposition of penalties but reduced the amount considering the circumstances of the case.

In conclusion, the Tribunal allowed the appeal of the Director who had resigned before the relevant period, absolving him of liability. For other Directors actively involved in the company's management during the period of issuing bogus invoices, the Tribunal upheld the penalties but reduced the amount based on the facts and circumstances of the case.