2011 (6) TMI 527 - AT - Central Excise

Scope of the term Person for the purpose of penalty under Rule 26 of the Central Excise Rules, 2001 penalty can be imposed on a person (natural), the penalty on a corporate body cannot be imposed under Rule 26 of Central Excise Rules, 2001 Held that - penalty under Rule 26 can be imposed on a person as per law and in the case of Twenty First Century Wire Rods Ltd. (2009 - TMI - 76242 - CESTAT, MUMBAI - Central Excise) this Tribunal has held that under Rule 26, the person does not mean merely living person. Every tax payer comes within the definition of the person such as corporate body or company. Therefore the adjudicating authority has rightly imposed penalty under Rule 26 on the appellants, redemption fine, penalty under Rule 26, appeal is disposed of

Summary

Issues:
Imposition of penalty under Rule 26 of the Central Excise Rules, 2001 and imposition of redemption fine under Section 34 of the Central Excise Act for confiscation of goods.

Analysis:

Imposition of Penalty under Rule 26:
The appellant, a manufacturer, appealed against the imposition of a penalty of Rs.1,93,917 under Rule 26 of the Central Excise Rules, 2001. The appellant had received made-ups from a job worker, misdeclared as FRC, leading to short payment of duty. The appellant argued that no show-cause notice was issued to the job worker for duty appropriation and that penalties on corporate bodies are not covered under Rule 26. The respondent contended that penalties can be imposed on juristic persons, including corporate bodies, as per legal precedent. The Tribunal found the duty short payment undisputed and upheld the penalty imposition. However, considering the lack of duty quantification, the penalty was reduced to Rs.10,000.

Imposition of Redemption Fine:
The appellant was also facing a redemption fine of Rs.3 lakhs under Section 34 of the Central Excise Act due to the confiscation of goods. The goods had been released under a bond, justifying the imposition of a redemption fine. The Tribunal acknowledged the appellant's status as a significant taxpayer and attributed the mistake to a godown keeper. Consequently, the redemption fine was reduced to Rs.50,000 based on the circumstances of the case. The Tribunal upheld the imposition of the redemption fine but adjusted the amount considering the appellant's stature and the nature of the error.

Conclusion:
The Tribunal disposed of the appeal, maintaining the imposition of the redemption fine at a reduced amount of Rs.50,000 and the penalty under Rule 26 at Rs.10,000. The judgment clarified the applicability of penalties under Rule 26 to juristic persons, including corporate bodies, and highlighted the importance of duty quantification in penalty determinations.