2005 (9) TMI 546 - AT - Central Excise

Summary

Issues:
Challenge to penalty imposed under Rule 209A of Central Excise Rules, 1944.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Mumbai involved a challenge to a penalty of Rs. 50,000 imposed under Rule 209A of the Central Excise Rules, 1944. The case revolved around M/s. Vardhaman Polymer Industries, engaged in manufacturing plastic molded parts of domestic mixers. Following searches in October 1992, authorities discovered that the manufacturer had sold goods to 67 parties clandestinely, supported by kachcha challans. Statements, including one from a partner, implicated various individuals, including the appellant, who denied purchasing goods from the manufacturer. The show cause notice alleged violations of Rule 209A, leading to penalties imposed on different purchasers by the Commissioner.

The appellant's counsel argued that the adjudicating authority's findings lacked precision and failed to establish compliance with Rule 209A's requirements. The counsel contended that as the manufacturer was an SSI unit possibly eligible for exemption, and the goods in question might fall under the exemption category, the order did not address the SSI exemption aspect. Without clarifying these points, establishing knowledge of the goods' liability for confiscation or penalty under Rule 209A was deemed insufficient. The Respondent's representative argued that a partner's statement incriminating the appellant should be considered binding by the adjudicating authority.

Upon review, the Tribunal found that to trigger Rule 209A, it must be proven that a person acquiring, transporting, or purchasing excisable goods knew or had reason to believe the goods were liable for confiscation. However, the adjudicating authority had not determined whether the goods were excisable or if the alleged purchaser was aware of their liability for confiscation. Without meeting these crucial parameters outlined in Rule 209A, the Tribunal concluded that a violation of the rule had not been established. Consequently, the Tribunal found no justifiable reason to uphold the penalty imposed on the appellants and decided to set it aside, allowing the appeal.

In summary, the Tribunal's decision centered on the lack of findings regarding the excisability of the goods and the purchaser's knowledge of their liability for confiscation, essential elements for invoking Rule 209A. As these requirements were not met, the Tribunal overturned the penalty, emphasizing the necessity for precise adherence to legal provisions when imposing penalties under the Central Excise Rules.