2012 (6) TMI 730 - AT - Central Excise

Penalty under Rule 25 - Held that - it is evident that under this rule penalty can be imposed only on producer, manufacturer, registered person of a warehouse, or registered dealer. It is not the case of the prosecution that the appellants herein are producer, manufacturer, registered person of a warehouse or registered dealer. Therefore, in our considered view Rule 25 of Central Excise Rules, 2002 is not attracted in this case. Otherwise also the issue is covered by the order of Coordinate Bench of this Tribunal in the case of M/s. Dhanlaxmi Garments v. CCE, Surat-I, reported in 2008 (4) TMI 296 - CESTAT AHMEDABAD . As such, order of the Commissioner imposing penalty on the appellants cannot sustain - Decided in favour of assessee.

Summary

Issues:
Imposition of penalty under Rule 25 of Central Excise Rules, 2002 on traders not registered with the excise department.

Analysis:
The appeals were filed against the order of the Commissioner (Adjudication) imposing penalties on three entities under Rule 25 of Central Excise Rules, 2002. The counsels for the appellants argued that they were traders not registered with the excise department, and therefore, the penalties imposed were erroneous. Rule 25 of the Central Excise Rules, 2002 allows for penalties on producers, manufacturers, registered persons of a warehouse, or registered dealers who contravene certain provisions. The appellants did not fall under any of these categories. The Tribunal noted that the rule does not apply to traders who are not registered with the excise department. Additionally, a precedent set by a Coordinate Bench of the Tribunal in a similar case supported this interpretation. As a result, the Tribunal held that the penalties imposed on the appellants were not valid and set aside the impugned order, allowing the appeals.

This judgment primarily revolves around the interpretation of Rule 25 of the Central Excise Rules, 2002 concerning the imposition of penalties. The key issue was whether penalties could be imposed on traders not registered with the excise department under this rule. The Tribunal clarified that the rule only applies to specific categories such as producers, manufacturers, registered persons of a warehouse, or registered dealers. Since the appellants did not fall into any of these categories, the penalties imposed on them were deemed incorrect.

The legal analysis focused on the text of Rule 25 of the Central Excise Rules, 2002, which outlines the conditions for imposing penalties. The rule specifies that penalties can be levied on individuals or entities involved in contraventions related to excisable goods, but it limits this to producers, manufacturers, registered persons of a warehouse, or registered dealers. The Tribunal emphasized that the appellants being traders not registered with the excise department did not meet the criteria outlined in the rule for penalty imposition. Additionally, a precedent cited by the Tribunal further supported the interpretation that penalties under Rule 25 do not extend to unregistered traders.

Ultimately, the Tribunal's decision hinged on the clear language of Rule 25 and the absence of the appellants from the specified categories eligible for penalties. By citing a relevant precedent and interpreting the rule's provisions, the Tribunal concluded that the penalties imposed on the appellants were unwarranted. As a result, the impugned order was set aside, and the appeals were allowed in favor of the appellants.