2011 (7) TMI 689 - AT - Central Excise

Penalty on partner of assessee - The appellant has not retracted or disowned the statement at any stage. Nor it is their case that the statement was recorded under coercion. The statement clearly indicates the involvement of the partner. - penalty on partner confirmed.

Summary

Issues:
- Appeal against Commissioner (Appeals)'s order
- Duty demand and penalty imposition
- Contention regarding penalty on partner
- Evidence and arguments presented
- Applicability of case laws
- Decision on penalty imposition on partner

Analysis:
The appellant filed an appeal against the Commissioner (Appeals)'s order upholding the lower adjudicating authority's decision regarding duty demand and penalty imposition. The case involved the appellant, a partner of a manufacturing firm engaged in the production of goods falling under Chapter 72 of the Central Excise Tariff Act, 1985. The dispute arose from intelligence suggesting clandestine clearance of goods without payment of Central Excise duty. The lower adjudicating authority confirmed duty demand and imposed penalties on the assessee, the appellant, and another partner. The appellant contended that since the firm had paid the duty, interest, and a portion of the penalty under Section 11AC, separate penalty on the partner was unwarranted. The appellant relied on legal precedents to support this argument, emphasizing the lack of evidence linking the partner to the wrongdoing.

The learned JDR argued that the appellant's admission of goods being cleared clandestinely, along with statements from other individuals, established the partner's involvement. The JDR cited a Supreme Court decision to strengthen the department's position. In response, the appellant's counsel highlighted differences between the current case and previous judgments, emphasizing the lack of specific allegations against the partner in the show-cause notice or the order. The counsel relied on a Supreme Court case to support the argument that penalties must be based on clear contraventions specified in the notice.

The presiding judge analyzed the contentions and evidence presented. The key issue was whether a separate penalty on the partner was justified when penalties had been imposed on the firm and no specific role was attributed to the partner. The judge referred to relevant case laws where penalties on partners were set aside due to lack of individual culpability. Despite the appellant's arguments regarding the partner's location and alleged lack of involvement, the judge found the partner's connection to the wrongdoing established through statements and orders placed for materials. Consequently, the judge upheld the lower authorities' decision on penalty imposition, dismissing the appeal against the Commissioner (Appeals)'s order.

In conclusion, the judgment clarified the principles governing penalty imposition on partners in cases where penalties were already imposed on the firm. The decision underscored the importance of individual culpability and the need for clear evidence linking partners to contraventions. The judgment highlighted the significance of specific allegations in show-cause notices and the impact of admissions on penalty determinations.