2015 (6) TMI 265 - AT - Central Excise

Imposition of penalty - Clearance of sugar - whether all the three appellants are required to be visited with penalties imposed under Rule 26 of the Central Excise Rules 2002 - - Held that - penalty can be imposed on any person who acquires possession of excisable goods which he knows or has reason to believe that the goods are liable for confiscation. In the cases in hand it is not in dispute that the sugar which has been cleared for export purpose was cleared on examination and on debiting of B-1 Bond AR-4 documents. If the bond amount (which is executed for undertaking discharge of duty liability), is debited, and the goods are cleared; the question as to they may be confiscated may not arise and in my considered view all the three appellants could not have any reason to believe that sugar cleared for export is liable for confiscation. Accordingly, in view of the foregoing penalties imposed by the adjudicating authority are set aside

Summary

Issues: Penalties imposed under Rule 26 of the Central Excise Rules 2002

The judgment addresses three appeals concerning penalties imposed on the appellants under Rule 26 of the Central Excise Rules 2002. The appellants argued that the imposition of penalties may not be valid as they were not aware of the diversion of sugar cleared for export to home consumption. The appellant Shri Siyaramji Gupta, who was not represented, was also part of the case. The learned counsel for the appellants contended that the Chairman and Secretary of the company were not informed about the diversion of sugar. On the other hand, the Additional Commissioner reiterated that the Chairman, Secretary, and Managing Director were aware of the diversion based on statements and evidence. The main issue revolved around whether all three appellants should be penalized under Rule 26 of the Central Excise Rules 2002.

Upon reviewing the submissions and records, the judge examined Rule 26 of the Central Excise Rules 2002, which outlines penalties for dealing with excisable goods liable for confiscation. The rule states that any person knowingly involved in such goods may face penalties. In this case, it was undisputed that the sugar cleared for export was examined and processed with the necessary documents. Since the bond amount was debited and the goods were cleared for export, the judge concluded that there was no reason for the appellants to believe the goods were liable for confiscation. Therefore, the penalties imposed by the adjudicating authority were set aside, and the appeals were allowed.