2004 (7) TMI 604 - AT - Central Excise

Summary

Issues:
1. Imposition of penalty under Rule 209A on the appellant company and its Director.
2. Contention regarding dropping of demands against M/s. Eros Pharma (P) Ltd. and its implications on the penalty imposition.
3. Enhancement of penalty in de novo proceedings.
4. Validity of imposing penalty under Rule 209A based on fresh grounds not mentioned in the Show Cause Notice.

Analysis:
1. The case involved the imposition of penalties under Rule 209A on the appellant company and its Director. The Commissioner had initially imposed penalties on them following a remand order directing consideration of the real manufacturer for duty liability. In the subsequent Order-in-Original, the Commissioner increased the penalty on the appellant company significantly, which was challenged by the appellant.

2. The appellant contended that since the demands against M/s. Eros Pharma (P) Ltd. were dropped after it was found they were not the manufacturers, the question of abetting in duty evasion by the appellants did not hold. The Commissioner, in the impugned order, shifted the focus to a different ground, alleging revenue loss due to non-payment of appropriate duty on specific goods. The Tribunal found that the invocation of Rule 209A against the appellants was not sustainable given the circumstances and dropped the penalties.

3. The appellant argued against the enhancement of penalties in de novo proceedings, citing a previous case where such a significant increase in penalties was not upheld by the Tribunal. The Tribunal observed that the Commissioner's decision to raise the penalty substantially, 50 times more than the original, was not in line with the Show Cause Notice and was unsustainable.

4. The Tribunal, after considering the facts and submissions, concluded that dropping the demands against M/s. Eros Pharma (P) Ltd. meant the abetment charge against the appellants was not valid. The Tribunal emphasized that the imposition of penalties under Rule 209A based on fresh grounds not mentioned in the Show Cause Notice was impermissible. Therefore, the penalties imposed on the appellant company and its Director were set aside, as the Commissioner's actions were deemed unsustainable in light of the case details.

This detailed analysis highlights the key legal issues, arguments presented by the parties, and the Tribunal's reasoning leading to the decision to set aside the penalties imposed on the appellant company and its Director.