2013 (9) TMI 654 - AT - Central Excise

Penalty under Rule 26 and u/s 11AC - Personal penalty on Director, transporter and other persons - Clandestine manufacture and clearance of goods - Held that - penalty of Rs. 10 Lakh imposed upon Shri Ajay S. Singhal, Director the first appellate authority did not think it proper to alter the imposition made by adjudicating authority. It is observed from the statement of Shri Ajay S. Singhal, Director that Shri Sandesh T. Bhingarde was working under his supervision and directions. MS Ingots manufactured by the main appellant M/s. Signora Texport were clandestinely removed and the main appellant has paid the entire amounts quantified by the department. Details of confessional statement are reflected in Para 26.11 of the adjudication order dated 31.03.2011. Therefore, on merits there is no case for setting aside the penalty upon the Director but there is weight in the argument of the advocate of the appellant that the main party M/s. Signora Texport Pvt. Limited has gone away with payment of only 25% of the penalty imposed under Section 11AC. Authorized signatory is liable to be penalised even if day to day business is controlled by the Director of the company. It is observed from the statement of authorised signatory in the present case that he was very much aware of clandestine activities under taken by the main company and in fact was assisting the main party and its Director in doing clandestine removals of the goods - Following decision of Hansa Gosalia vs. CCE, Thane-II 2013 (6) TMI 143 - BOMBAY HIGH COURT . - However, looking to the quantum of duty evaded and the penalty imposed upon the Director, it is ordered that penalty of Rs. 5 Lakh upheld by the first appellate authority upon Shri Santesh T. Bhingarde, authorised signatory is reduced to Rs. 2,00,000/- (Rupees two lakh only). Evident from his statement recorded during the course of investigation that entries made in the note pad maintained for clandestine removals showed the transportation made by him in all such clearances. It is admitted by him that he did not know the exact address and name of concerns where the Ingots were delivered as he had not issued any lorry receipts. It is also accepted by him that freight charged by him from the main party was received in cash. Therefore, the conduct and act of the transporter is not free from doubt as he was not maintaining any written records like lorry receipt, registers etc. so that clandestine activities done by the main party could not be detected by any agency. Therefore, from the conduct of the transporter Shri Amrit K. Chauhan, it is clear that he was very much aware of the clandestine activities being undertaken by M/s. Signora Texport Pvt. Limited and the plea of the appellant that he was not aware of the clandestine activities of the main appellant is required to be rejected - However, looking at the role played by him viz-a-viz the role played by the other appellants and the keeping in mind the Central Excise duty evaded in this case, penalty of Rs. 8 Lakhs imposed upon him and upheld by first appellate authority, is reduced to Rs. 2,00,000/- (Rupees two lakhs only). - Decided partly in favor of appellants.

Summary

Issues:
Penalties imposed on appellants under Central Excise Act, 1944 for clandestine activities.

Analysis:
1. Penalty on Shri Ajay Singhal, Director:
- Original penalty: Rs. 10 Lakh
- Argument: Advocate contended for a proportionate penalty due to payment made by the company.
- Decision: Penalty reduced to Rs. 3,00,000 considering the circumstances.

2. Penalty on Shri Sandesh T. Bhingarde, Authorised Signatory:
- Original penalty: Rs. 10 Lakh (reduced from Rs. 10 Lakh)
- Argument: Advocate argued no penalty should be imposed due to working under Director's instructions.
- Revenue's Argument: Supported penalty imposition based on the rules.
- Decision: Penalty reduced to Rs. 2,00,000 considering his involvement.

3. Penalty on Shri Amrit K. Chauhan, Transporter:
- Penalty: Rs. 8 Lakh
- Argument: Transporter claimed unawareness of goods' nature, citing judgments.
- Revenue's Argument: Transporter was aware and involved in clandestine activities.
- Decision: Penalty reduced to Rs. 2,00,000 based on his role and involvement.

4. Overall Observations:
- Main appellant paid disputed duty amount and penalties partially.
- Penalties upheld with reductions based on individual roles and involvements.
- Judgments and statements considered in determining penalties.

The judgment by the Appellate Tribunal CESTAT Ahmedabad involved penalties imposed on different individuals for their roles in clandestine activities under the Central Excise Act, 1944. The penalties on the Director and Authorised Signatory were reduced based on their involvements and circumstances. The Transporter's penalty was also reduced considering his level of awareness and involvement in the activities. The decision was made after thorough examination of arguments, statements, and legal provisions to ensure fair and just penalties were imposed based on individual responsibilities and actions.