2006 (12) TMI 64 - AT - Central Excise

Personnel penalty - Partner of the firm found engaged in procurement and manufacture and sale of good without payment of duty and forced his employee also in the wrong doing acts - Personnel penalty on partner and employee upheld

Summary

Issues:
1. Clandestine removal case involving duty payment and penalties.
2. Role of partner and chemist in clandestine activities.
3. Liability of traders purchasing goods without invoices.
4. Imposition and reduction of penalties on appellants.

Issue 1: Clandestine removal case involving duty payment and penalties:
The appeals arose from the Commissioner (Appeals) order upholding the original authority's decision regarding a case of clandestine removal by a firm, with duty amounting to Rs. 3,59,706 being paid. No penalty was imposed on the firm as the duty was paid before the show cause notice. The department did not appeal this decision.

Issue 2: Role of partner and chemist in clandestine activities:
The partner of the firm was actively involved in the clandestine activities, directing the chemist to dispatch goods without preparing invoices or paying duty. The chemist admitted to these actions but claimed to be following the partner's orders. The Tribunal found the partner's involvement warranted penalty, as he played a significant role in the illegal activities.

Issue 3: Liability of traders purchasing goods without invoices:
The traders who purchased goods clandestinely removed without invoices were found to have knowingly received the goods without proper documentation and paid in cash. The Tribunal held that they could not be considered bona fide purchasers given the circumstances of the case.

Issue 4: Imposition and reduction of penalties on appellants:
The Tribunal acknowledged the imposition of penalties on the appellants but agreed with the advocate's submission on reducing the penalties. The penalties were reduced for each appellant, including the partner and the chemist, based on the quantum of penalty imposed, with specific amounts mentioned for each individual.

In conclusion, the Tribunal partly allowed the appeals by reducing the penalties imposed on the appellants based on the merits of the case and the quantum of penalty deemed appropriate for each party involved.