2007 (3) TMI 443 - AT - Central Excise

Summary

Issues involved:
The issues involved in the judgment are evasion of excise duty, imposition of penalties on the applicants, and the request for waiver of pre-deposit of penalties.

Evasion of Excise Duty:
The case involved M/s. Sarvodaya Laboratories evading excise duty by using parallel delivery challan books without corresponding excise invoices, leading to a detailed investigation. The Central Excise officers observed that goods were moved only under a commercial invoice without proper excise documentation. Consequently, a show cause notice was issued to demand Central Excise duty from M/s. Sarvodaya, along with interest and penalties under relevant sections of the Central Excise Rules.

Imposition of Penalties:
Upon adjudication, the Commissioner confirmed the duty demand, imposed penalties on M/s. Sarvodaya Laboratories and its officers, including directors and partners, under various sections of the Central Excise Rules. Penalties were also proposed on the applicant companies - M/s. Vipul Drugs, M/s. Pharmica, and M/s. Money Pharma, along with their respective partners and directors, for their involvement in the transactions with M/s. Sarvodaya.

Request for Waiver of Pre-Deposit:
While M/s. Sarvodaya Laboratories did not appeal, the applicant companies and individuals sought a waiver of pre-deposit of penalties imposed on them. They argued that as dealers of raw materials, they were not registered dealers of the finished goods in question and thus should not be penalized under the specific rules cited. The applicants contended that they were not aware of the evasion of excise duty by M/s. Sarvodaya and therefore should not be held liable for penalties. The Tribunal found merit in the applicants' arguments, noting that penalties under the mentioned rules could not be imposed on them. Consequently, the Tribunal granted a complete waiver of pre-deposit of penalties for all the applicants, staying the recovery until the disposal of the appeals.