2010 (9) TMI 373 - HC - Central Excise

Penalty co-noticees abetted the contravention of payment of excise duty Appeal against same order by different party challenge to order by another party rejected on account of non-removal of the office objections - Appellants submitted that instant appeals can still be pursued not sustainable as identical findings were recorded for all parties and the identical order passed by the CESTAT of setting aside the penalty order become final and binding. since the findings against the co-noticees were recorded vis-a-vis their role as distributors they are one and indivisible. The order of the CESTAT as regards the setting aside of penalty against the said M/s. Beekay Industries having become final and binding, the said course of action would therefore also follow in respect of the Respondents above named. This Court cannot, in the above Appeals, whilst considering the issue of penalty which has been set aside against the Respondents above named, record inconsistent findings. Resultantly, question of law framed would have to be answered in favour of the Respondents and against the Revenue.

Issues involved:
1. Setting aside of penalty under Rule 209A of the Central Excise Rules, 1944 by the Customs, Excise and Service Tax Appellate Tribunal.
2. Questions of law regarding the evidence considered by the Tribunal.
3. Allegations of aiding and abetting in the evasion of central excise duty against co-noticees.
4. Adjudication of penalty against the co-noticees by the Commissioner of Central Excise.
5. Appeal process and decision by the Customs Excise & Service Tax Appellate Tribunal.
6. Challenge to the Tribunal's decision in the High Court.

Analysis:
1. The High Court considered the challenge to the orders of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) that set aside the penalty imposed under Rule 209A of the Central Excise Rules, 1944. The Appeals raised questions of law regarding the evidence considered by the Tribunal in allowing the appeals without fully taking into account all vital evidences. The Tribunal's decision to overturn the penalties was at the center of the dispute.

2. The factual background involved a case against a manufacturer for evading central excise duty, with several co-noticees accused of aiding and abetting in the evasion. The Commissioner of Central Excise adjudicated penalties against the co-noticees, holding them responsible for conniving in aiding the manufacturer to evade duty. The High Court detailed the involvement of various co-noticees in supplying raw materials and components for the manufacture of goods without appropriate documentation.

3. The Appeals process involved the co-noticees appealing before the First Appellate Authority, which was rejected due to non-compliance with pre-deposit requirements. Subsequently, the co-noticees appealed to the CESTAT, which allowed the appeals in 2004. The CESTAT's reasoning focused on the lack of mens rea or guilty mind on the part of the co-noticees, leading to the setting aside of the penalties. The High Court examined the Tribunal's decision and the arguments presented by the Appellant.

4. The High Court acknowledged the concurrent findings of fact against all co-noticees, indicating their involvement in aiding and abetting the contravention of excise duty. The Court noted that the findings against the co-noticees were indivisible, and the order setting aside penalties for one co-noticee became final and binding for others in similar circumstances. Therefore, the Court dismissed the Appeals, upholding the setting aside of penalties against the co-noticees based on consistent findings.

Overall, the High Court upheld the Tribunal's decision to set aside the penalties imposed on the co-noticees, emphasizing the importance of consistent findings and the lack of mens rea in the co-noticees' actions.

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