2008 (4) TMI 585 - AT - Central Excise

Summary

Issues involved: Imposition of penalty on the Managing Director for manipulation of TR-6 challan and keeping unaccounted excisable goods.

Imposition of penalty for manipulation of TR-6 challan:
The Managing Director of the company appealed against the penalty imposed for manipulation of TR-6 challan, where it was alleged that the company had forged two TR-6 challans by manipulating the amount deposited. The company paid the duty on the excess amount of TR-6 challans and the shortage of inputs upon detection. The Adjudicating Authority confiscated the excess goods, imposed redemption fine, and confirmed the demand of duty on the shortage of inputs. The penalties imposed on the Appellant were upheld by the Commissioner (Appeals).

Defense and findings:
The Appellant's advocate argued that the forging of TR-6 challans was done by the Accountant without the Appellant's knowledge. The Appellant deposited the duty amount on the forged TR-6 challans even beyond the extended period of limitation. It was also argued that the Director was not overseeing the day-to-day operations, hence the penalty on the Appellant was unjustified.

Department's stance:
The Department reiterated the findings of the Commissioner (Appeals), stating that the forging of TR-6 challans was established, and as the Managing Director, the Appellant was responsible for the offense. The Department relied on a Supreme Court decision and held the Appellant accountable under the Companies Act.

Decision and reasoning:
After considering both sides, it was found that there was no evidence implicating the Appellant in the shortage/excess of goods. The penalty of Rs. 25,000 imposed on the Appellant for shortage/excess of goods was set aside. Regarding the penalty of Rs. 1,08,000 for manipulation of TR-6 challan, it was noted that the Appellant had no knowledge of the forgery, which was committed by the Accountant. The penalty amount was reduced to Rs. 50,000 based on the Company settling the penal provisions by paying 25% of the duty.

Conclusion:
The Appellate Tribunal reduced the penalty imposed on the Managing Director from Rs. 1,08,000 to Rs. 50,000, considering the circumstances and the Company's actions in settling the duty.