2006 (10) TMI 464 - AT - Central Excise

Summary

Issues: Imposition of penalty on both the company and its proprietor.

The judgment deals with an appeal regarding the imposition of penalties on a company and its proprietor by the Joint Commissioner under the Central Excise Rules, 2002. The Joint Commissioner had confiscated polyester fibre yarn and imposed a duty on polyester textile yarn, along with penalties on the main assessee and the proprietor. The Commissioner (Appeals) confirmed the confiscation and redemption fine but set aside the penalties on the company and its proprietor. The Revenue appealed, contending that penalties should be imposed on either the company or the proprietor, not both. The Tribunal agreed, confirming the penalty on the proprietor while setting aside the penalty on the company under Section 11AC of the Central Excise Act read with Section 14A of the Customs Act. The Revenue's appeal was allowed, modifying the Commissioner (Appeals) order accordingly.

The main issue in this case was whether penalties could be imposed on both the company and its proprietor for the same violation. The Revenue argued that established legal principles dictate that penalties should be imposed on either the assessee or the proprietor, but not on both. The Tribunal agreed with this contention, stating that the penalty of &8377; 10,000 imposed on the proprietor of the firm would be confirmed, while the penalty on the company was set aside. This decision was based on the interpretation of Section 11AC of the Central Excise Act read with Section 14A of the Customs Act, which governs the imposition of penalties in such cases.

The Tribunal's analysis focused on the legal principle that penalties should be imposed on either the assessee or the proprietor, but not on both. The judgment emphasized that the penalty on the proprietor of the firm was confirmed while the penalty on the company was set aside. This decision was made to ensure consistency with established legal principles and to correct the order of the Commissioner (Appeals) in this regard. By allowing the Revenue's appeal and modifying the Commissioner (Appeals) order, the Tribunal clarified the correct application of penalty provisions under the relevant statutes, thereby resolving the issue of dual penalties on the company and its proprietor.