2016 (11) TMI 1489 - AT - Central Excise

Penalty u/r 26 of the CER, 2002 - imposition of penalty on the ground that the appellant being a regular transporter and himself prepared consignment note for delivery of the goods at Muradabad and consequently the said goods were delivered at Surat - Held that - Provisions of Rule 26 of CER, would get attracted only if any person who acquires possession of, or is in anyway concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with any excise goods, which he knows or has reason to believe are liable to confiscation under the Rules - In the case in hand it is on record that appellant is being a transporter, documents like Excise invoice were available with him - penalty not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Imposition of penalty under Rule 26 of the Central Excise Rules, 2002 without proper findings.
2. Interpretation of Rule 26 regarding liability in transportation of excise goods.
3. Applicability of penalty on a regular transporter for goods delivered at a different location.

Detailed Analysis:
Issue 1: The appeal was filed against an order imposing a penalty of &8377; 75,000 under Rule 26 of the Central Excise Rules, 2002. Despite the absence of the Appellant, the matter was taken up for disposal. The learned DR argued for sustaining the penalty, citing the appellant's role as a regular transporter who prepared the consignment note for goods delivered at a different location. However, upon examination, it was noted that the adjudicating authority failed to provide any findings on how the appellant abetted or violated the rules in the 87-page order-in-original.

Issue 2: The Tribunal observed that Rule 26 of the Central Excise Rules, 2002 applies to individuals who are involved in transporting, removing, or dealing with excise goods they know are liable for confiscation. In this case, the appellant, a transporter, possessed documents indicating the goods should be delivered at one location but were actually delivered elsewhere. The rule requires knowledge or reason to believe that the goods are liable for confiscation, which was not proven in this scenario. The absence of evidence linking the appellant to any violation led to the conclusion that the penalty imposed was unsustainable.

Issue 3: The decision highlighted the importance of establishing a direct connection between the transporter's actions and the violation of excise rules. Merely possessing documents related to the goods' transportation was insufficient to hold the transporter liable for penalties under Rule 26. As the appellant's role as a transporter did not demonstrate knowledge or involvement in any wrongdoing, the Tribunal set aside the impugned order and allowed the appeal, emphasizing the necessity for clear evidence of culpability to impose penalties on transporters in such cases.