2010 (7) TMI 393 - AT - Central Excise

Penalty on managing director Undervaluation - evidences proved that excess amount has been collected by the persons authorized by the appellant - charge of under valuation has attained finality (though by way of technical dismissal of the appeal filed by the Company), the current appellant being the Managing Director of the said Company during the relevant period, cannot run away from his responsibilities as a Managing Director no record to indicate that the current appellant had in fact tried to stop this kind of activity undertaken by the Company and its staff in the absence of any evidence Appeal rejected

Summary

Issues:
Penalty under Rule 209A of Central Excise Rules, 1944 for involvement in under valuation of final products cleared from factory.

Detailed Analysis:

Issue 1: Penalty Imposed on Appellant
The appellant was penalized under Rule 209A of the Central Excise Rules, 1944 for involvement in under valuation of final products cleared from the factory. The appellant, as the Ex-Managing Director of the company, was held accountable for the under valuation. The Adjudicating Authority imposed the penalty based on the findings that excess amounts were collected by personnel authorized by the appellant, and there was evidence of under accounting of raw materials and administrative expenses. The appellant's role as the Managing Director during the relevant period was crucial in determining liability.

Issue 2: Appellant's Defense
The appellant's counsel argued that the appellant's role was not clearly pinpointed by the Adjudicating Authority. It was contended that there was no evidence to suggest that the appellant directed under valuation or collected excess cash. The counsel also claimed that the penalty amount was disproportionate and lacked confidence in the Adjudicating Authority's findings. However, the Tribunal found that the appellant, as the Managing Director, could not evade responsibility for the company's actions, especially since there was no evidence of the appellant attempting to prevent the under valuation activities.

Issue 3: Dismissal of Appeals
The JCDR submitted that the company's appeals were dismissed due to non-payment of the pre-deposited amount, indicating finality to the charge of under valuation. The JCDR argued that the appellant, as the Managing Director, was the primary beneficiary of the under valuation scheme. The Tribunal noted the dismissal of the company's appeals and the conclusive evidence of under valuation, further reinforcing the appellant's liability.

In conclusion, the Tribunal rejected the appellant's appeal, upholding the penalty imposed under Rule 209A of the Central Excise Rules, 1944. The judgment emphasized the appellant's role as the Managing Director and the lack of evidence showing efforts to prevent under valuation activities. The dismissal of the company's appeals and the evidence presented solidified the appellant's liability in the under valuation scheme.