2007 (6) TMI 458 - AT - Central Excise

Summary

Issues involved:
The issue involved in this case is whether a penalty imposed under Rule 26 of the Central Excise Rules, 2002 can be imposed on companies or only on natural persons.

Judgment Details:

Issue 1: Imposition of Penalty on Companies vs. Natural Persons
The appellant-companies filed applications seeking waiver of predeposit and stay of recovery for penalties imposed on them under Rule 26 of the Central Excise Rules, 2002. The appellants argued that such penalties could only be imposed on natural persons, not on companies. They referred to a Tribunal decision in Woodmen Industries v. CCE, which held that a penalty under Rule 26 could only be imposed on a natural person, not on a partnership firm. The department's civil appeal against this decision was dismissed by the Apex Court. The appellants also relied on a decision by a learned Member of the Bench, stating that penalties under Rule 209A of the Central Excise Rules, 1944 (equivalent to Rule 26) were not imposable on partnership concerns but only on natural persons. The SDR cited a judgment of the Madhya Pradesh High Court, where a company was considered a "person."

Issue 2: Prima Facie Case Against Penalties
After considering the submissions, the Tribunal noted that the question before the High Court in the Madhya Pradesh case was different from the cases cited by the appellants regarding the imposition of penalties under the Central Excise Rules. The Tribunal found that the appellants had made out a prima facie case against the penalties imposed on them under Rule 26. Consequently, the Tribunal granted waiver of predeposit and stay of recovery for those penalties.

The judgment was dictated and pronounced in open Court by Member (J) P.G. Chacko.