2012 (8) TMI 847 - AT - Central Excise

Waiver of condition of pre-deposit of penalty - Multi Track Pan Masala Making Machine No. PK 90 GHP - Penalty has been imposed on the appellant on the ground that he abetted evasion of excise duty by wrongly describing the machine in the invoice as Simplex single track Pan Masala packing machine - Held that - it is apparent that the case of the appellant is not covered under clause (1) of Rule 26 as he has not dealt with excisable goods in any manner whatsoever. He has only supplied the packing machine. Coming to clause (2) of Rule 26, under this clause, prima facie the case of the appellant is not covered because neither there is any evidence that the appellant issued the invoices which according to the Department wrongly described the packing machine nor is there any evidence that the aforesaid wrong description in the invoices was given by the issuing clerk on the instruction of the appellant who is Director of the company. Further, ld. Jt. CDR has failed to point out any evidence which may show that the appellant in any manner entered into conspiracy with the main assessee M/s Dharampal Satyapal Ltd. or he has abetted the making of wrong invoices or evasion of excise duty. Thus we are of the view that appellant has a strong prima facie case which calls for waiver of the condition of pre-deposit of penalty for hearing of the appeal - Stay granted.

Summary

Issues:
1. Waiver of pre-deposit of penalty under Rule 26 of the Central Excise Rules, 2002.

Analysis:
The appellant, who is the Director of a company, supplied a machine to the main assessee, leading to the imposition of a penalty of Rs. 20 lakhs for allegedly abetting the evasion of excise duty by misdescribing the machine in the invoice. The appellant sought a waiver of the pre-deposit condition, arguing that there was no evidence of his involvement in any conspiracy or collusion for evading excise duty. It was contended that the appellant was not responsible for issuing the invoice and that no penalty was imposed on the company despite a show cause notice being issued. The appellant's counsel pressed for the waiver based on these grounds.

The Joint Commissioner of Central Excise opposed the plea for waiver, alleging that the appellant intentionally misdescribed the machine supplied. He referred to the appellant's statement admitting that the machine was wrongly described in the invoices. The Tribunal considered both sides' arguments and examined the record to reach a decision.

The penalty was imposed on the appellant under Rule 26 of the Central Excise Rules, 2002, which pertains to certain offenses related to excisable goods. The Tribunal analyzed the provisions of Rule 26, highlighting that the appellant's case did not fall under either clause (1) or (2) of the rule. It was noted that the appellant did not deal with excisable goods but only supplied the packing machine. Regarding clause (2) of Rule 26, it was observed that there was no evidence implicating the appellant in issuing the incorrect invoices or abetting any wrongdoing. The Tribunal found no proof of the appellant's involvement in a conspiracy or abetment of excise duty evasion. Consequently, the Tribunal concluded that the appellant had a strong prima facie case warranting the waiver of the pre-deposit condition for the penalty amount.

In light of the analysis, the Tribunal granted the stay application, waived the pre-deposit condition of the penalty, and stayed the recovery of the penalty amount. The appeal was directed to be listed along with connected appeals for further proceedings.