2010 (12) TMI 311 - AT - Central Excise

Penalty in terms of the provisions of Rule 209A - Director accepted his role in illicit clearance of the goods by the Company and has also disclosed the modus operandi of preparing the parallel set of Central Excise invoices and destruction of the same after the clearances - shortage of the goods detected at the time of visit of the officers was not disputed by the appellant - short found goods stands cleared without payment of duty under the directions of the two Directors including the appellant - evidence on record to reflect upon the involvement of the present appellant so as to invoke penal the provisions of Rule 209A against him - appellant liable to penalty under Rule 209A

Issues:
Challenge to personal penalty under Rule 209A of Central Excise Rules, 1944 imposed on the appellant, confirmation of duty demand against the company M/s. Mahendra Mill Limited, involvement of appellant as a director in illicit clearance of goods without payment of duty, defense of appellant claiming lack of monetary gains and awareness of facts, adequacy of evidence to invoke penalty under Rule 209A, lack of cross-examination opportunity for co-accused, modification of penalty amount.

Analysis:

1. Personal Penalty under Rule 209A: The judgment addresses the challenge to the personal penalty of Rs. 10 Lakhs imposed on the appellant under Rule 209A of the Central Excise Rules, 1944. The penalty was imposed in connection with the confirmation of duty demand of approximately Rs. 49.86 Lakhs against M/s. Mahendra Mill Limited. The appellant, a director of the company, was found involved in the illicit clearance of goods without payment of duty. The Tribunal upheld the imposition of penalty under Rule 209A, considering the evidence of the appellant's involvement in the clandestine activities.

2. Involvement of Appellant as a Director: The judgment highlights the appellant's admission of his role in the illicit clearance of goods. The appellant, in his statements, confessed to overseeing various aspects of the company's operations, including dealing with Central Excise matters. He acknowledged the clearance of goods without payment of duty under his directions, including the preparation of parallel invoices with fake entry numbers. The evidence presented, including statements from other individuals, clearly implicated the appellant in the wrongful activities.

3. Defense of Lack of Monetary Gains and Awareness: The appellant's defense claiming lack of monetary benefits and awareness of the actual facts was not accepted by the adjudicating authority. The Commissioner observed that the appellant's defense of being directors only on paper and signing statements to save the company from financial collapse was not valid. The evidence on record indicated that the goods were cleared without payment of duty with the knowledge and consent of the directors, including the appellant.

4. Adequacy of Evidence and Lack of Cross-Examination: The Tribunal found that there was ample evidence on record to establish the appellant's involvement in the illicit activities, justifying the imposition of penalty under Rule 209A. The appellant's argument regarding the lack of cross-examination opportunity for co-accused individuals whose statements were relied upon was dismissed since no such request was made before the adjudicating authority.

5. Modification of Penalty Amount: While upholding the order for penalty under Rule 209A, the Tribunal considered the appellant's plea regarding lack of monetary benefits from the clandestine removals. Consequently, the penalty was reduced from Rs. 10 Lakhs to Rs. 2.50 Lakhs. The appeal was rejected except for the modification in the quantum of penalty, acknowledging the appellant's plea regarding monetary gains.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Ahmedabad provides a comprehensive overview of the issues involved, the evidence presented, and the Tribunal's decision regarding the personal penalty imposed on the appellant in connection with the illicit clearance of goods without payment of duty.

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