2008 (7) TMI 809 - AT - Central Excise

Summary

Issues:
1. Duty demand and penalty imposition on the Respondent company and its Executive.
2. Dispute regarding clandestine removal and penalty justification.
3. Interpretation of Tribunal's judgment in Rashtriya Ispat Nigam Ltd. v CCE.
4. Applicability of penalty on the company and its Director/Partner.
5. Reversal of Tribunal's judgment in Machino Montell (I) Ltd. by Punjab & Haryana High Court.

Issue 1: Duty demand and penalty imposition on the Respondent company and its Executive.
The Revenue filed appeals against the order-in-appeal confirming duty demand and penalties against the Respondent company and its Executive. The Dy. Commissioner upheld the allegation of clandestine removal, imposing penalties equal to the duty demand confirmed. The Commissioner (Appeals) confirmed the duty demand and 25% penalty but observed that shortage of finished goods cannot be considered clandestine removal without corroborative evidence. The Revenue challenged this order.

Issue 2: Dispute regarding clandestine removal and penalty justification.
The Departmental Representative argued that the Respondents accepted the allegation of clandestine clearances by paying duty and penalty before the show cause notice. The Counsel for Respondents contended that the shortage in finished goods was due to high burning loss, justifying the duty and penalty payments made. The penalty imposition on the Executive was debated based on these arguments.

Issue 3: Interpretation of Tribunal's judgment in Rashtriya Ispat Nigam Ltd. v CCE.
The Commissioner of Central Excise (Appeals) referred to the Tribunal's judgment in Rashtriya Ispat Nigam Ltd. v CCE, upheld by the Supreme Court, stating that payment of duty and 25% penalty before the show cause notice precludes further penalty imposition. The order-in-original demanding interest and additional penalty was set aside based on this interpretation.

Issue 4: Applicability of penalty on the company and its Director/Partner.
The Commissioner (Appeals) set aside the penalty on the Director/Partner, noting that shortage of finished goods does not necessarily indicate clandestine removal without supporting evidence. However, the Commissioner's decision that no penalty was imposable on the company contradicted the confirmation of duty demand and 25% penalty. The Tribunal's judgment in Machino Montell (I) Ltd. was reversed by the Punjab & Haryana High Court, influencing the decision on penalty imposition.

Issue 5: Reversal of Tribunal's judgment in Machino Montell (I) Ltd. by Punjab & Haryana High Court.
The High Court's reversal of the Tribunal's judgment in Machino Montell (I) Ltd. was cited, impacting the decision-making process regarding penalty imposition. The order was modified to uphold the duty demand and 25% penalty while setting aside the decision that no penalty was imposable on the company. However, no interference was deemed necessary regarding the penalty imposition on the Executive due to lack of evidence implicating their involvement.

This detailed analysis covers the duty demand, penalty imposition, interpretation of legal judgments, and the rationale behind the decisions made by the Appellate Tribunal CESTAT, NEW DELHI.