2008 (2) TMI 783 - AT - Central Excise

Summary

Issues: Imposition of penalty on the Appellant Company and its Director.

The Appellate Tribunal CESTAT, New Delhi, heard appeals against the imposition of penalties on the Appellant Company and its Director. The case involved the closure of the factory in April 1998, with the electricity disconnected, and subsequent discrepancies found during a visit by Central Excise officers in February 2002. The Managing Director of the Appellant Company stated that the stock was shifted to another premises under pressure from the owner. The Adjudicating Authority confirmed the duty demand, imposed penalties under Section 11AC of the Central Excise Act, 1944, and Rules 25 and 26 of the Central Excise Rules, 2002. The Tribunal noted that the factory was closed since 1998, and the goods were properly recorded in statutory records. The Tribunal found that the Appellants had shifted the stock to another premises due to external pressure, leading to a failure to account for the goods properly. While Section 11AC of the Act could not be invoked, the contravention of rules justified the penalty under Rule 25. However, the penalty under Rule 26 was deemed unnecessary for the Director. Consequently, the penalties under Section 11AC on the Appellant Company and its Director were set aside, but the penalty under Rule 25 on the Appellant Company was upheld. The appeal was disposed of accordingly.