2007 (6) TMI 8 - AT - Central Excise

Penalty- Revenue contended that respondent had facilitated evasion of duty by issuing the fake invoices in question held that respondent is not anywhere concerned with the allegation,so penalty set aside

Summary

Issues:
1. Quashing of penalty by Commissioner (Appeals) under Rule 209A of Central Excise Rules, 1944.
2. Imposition of penalty on the respondent for Modvat irregularities.
3. Interpretation of Rule 209A regarding penalty for certain offenses.
4. Applicability of penalty under Rule 209A to goods not subject to the proceedings.

Analysis:
1. The appeal before the Appellate Tribunal CESTAT, New Delhi concerned the quashing of a penalty of Rs. 1,50,000 imposed on the respondent by the Commissioner (Appeals) under Rule 209A of the Central Excise Rules, 1944. The penalty was related to Modvat irregularities allegedly committed by A.B. Tools, with the charge that the respondent had facilitated duty evasion by issuing fake invoices.

2. The respondent contended that he was not involved in the Modvat irregularities and that the Commissioner accepted this argument, leading to the setting aside of the penalty. The revenue did not dispute that the respondent was not connected to the Modvat credit dispute, raising the issue of whether a penalty under Rule 209A could be imposed in such circumstances.

3. The crucial issue revolved around the interpretation of Rule 209A, which stipulates penalties for certain offenses related to excisable goods. The rule specifies penalties not exceeding three times the value of the goods or Rs. 5,000, whichever is greater. The Tribunal agreed with the Commissioner that a penalty under Rule 209A could only be imposed concerning the duty evasion under consideration in the specific case.

4. It was determined that since the Cenvat credit dispute pertained to goods not dealt with by the respondent, the Rule did not provide guidelines for the quantum of penalty in such a scenario. Consequently, the imposition of a penalty on the respondent was deemed not possible due to the lack of connection between the respondent and the goods subject to the proceedings.

5. The Tribunal, after thorough consideration, concluded that there was no merit in the revenue's appeal and rejected it. The judgment highlighted the importance of the specific connection between the individual concerned and the excisable goods in question when applying penalties under Rule 209A, ensuring a fair and accurate enforcement of excise regulations.