2012 (6) TMI 144 - AT - Central Excise

Confiscation of the goods and imposition of penalty Held that - Since Final Order of the Tribunal declares that said demand of the duty on 28,057 kgs of Aluminum Sections now stand set aside and as when there is no demand, the question of penalty under Rule 26 does not arise - the said rule demands imposition of penalty only when there is knowledge of the liability of confiscation of goods and the question of confiscation of goods arises only when there is liability and evasion of Central Excise duty on clearances of such goods which is not present in this case in favour of assessee.

Summary

Issues:
1. Confiscation of Aluminum Sections and imposition of penalties.
2. Appeal against penalties imposed on the appellants.
3. Consideration of duty demand and penalties under Rule 26 of Central Excise Rules, 2002.

Issue 1: The Departmental authorities found Aluminum Sections in a godown during a search operation and suspected duty liability non-payment, leading to the issuance of a Show Cause Notice for confiscation and penalties on various entities. The Jt. Commissioner confiscated the Aluminum Sections, imposed penalties, and allowed redemption on payment of a fine. The first appellate authority dropped penalties on one entity but upheld them on others, leading to appeals by all appellants.

Issue 2: The appellants challenged the penalties imposed by the first appellate authority. The Counsel argued that the penalties arose from a separate investigation against M/s Shreeji Aluminum Pvt. Ltd., which was already disposed of by a Tribunal order setting aside the duty demand. As there was no demand, the Counsel contended that penalties under Rule 26 should not apply.

Issue 3: The Senior Departmental Representative argued that a previous Tribunal order on common investigations included the quantity involved in the confiscation, justifying the duty demand confirmed by the adjudicating authority. However, upon review of the majority order in a related case, the Judge found that the duty demand on the Aluminum Sections had been set aside. Consequently, the penalties imposed under Rule 26 could not stand as the rule requires knowledge of liability for confiscation, which was absent in this case. The Judge concluded that since the quantity was deemed non-dutiable, the appellants could not be penalized under Rule 26.

In conclusion, the Judge held that the appellants were not liable for penalties under Rule 26 of the Central Excise Rules, 2002, as there was no duty demand on the Aluminum Sections. Therefore, the impugned order imposing penalties was set aside, and all appeals were allowed with any consequential relief.