2009 (8) TMI 898 - AT - Central Excise

Summary

Issues:
1. Imposition of penalties under Rule 27 of Central Excise Rules on two companies and a director.
2. Discrepancies in transport documents leading to penalties.
3. Dispute over penalty amount and sustainability of penalties.

Analysis:
The judgment by the Appellate Tribunal CESTAT KOLKATA involved appeals against penalties imposed on two companies and a director under Rule 27 of the Central Excise Rules, 2002. The penalties amounted to Rs. 1,50,000 each on the manufacturer and job-worker companies, and Rs. 20,000 on the director of the manufacturing unit. The appellants contended that the penalties exceeded the prescribed limit of Rs. 5,000 under Rule 27. They argued that since no duty demand was confirmed and export benefits were granted, they should not be liable for penalties. The adjudicating Authority had dropped the duty demand after examining the evidence, further supporting the appellants' position.

The Revenue, on the other hand, asserted that irregularities were identified during record verification, specifically discrepancies between the vehicle descriptions in transport documents and invoices. These discrepancies led to the imposition of penalties under Rule 27 of the Central Excise Rules. However, the Tribunal noted that Rule 27 stipulates a penalty limit of Rs. 5,000 only. Given that the demand exceeding Rs. 6 crores was dismissed by the adjudicating Authority and no duty was confirmed in the impugned order, the Tribunal deemed the penalties unsustainable and set them aside. The judgment emphasized that since no duty demand existed and export benefits were granted, the penalties imposed were not justified under Rule 27. As a result, the appeals were allowed, and the penalties were overturned by the Tribunal.