2015 (12) TMI 865 - AT - Central Excise

Waiver of pre deposit - clandestine removal - preparing parallel Central Excise invoices - Evasion of duty - Confiscation of goods - Penalty under rule 26 - On investigation by the DGCEI Officers it is revealed that manufacture company has not accounted for production of paints and clear the same without payment of duty of ₹ 88,79,846/- during the period of March, 2007 to April, 2010 either by issuing parallel invoices/ non issue of invoices collection of sale proceeding in cash etc - Held that - In the case of duty evasion by the company wherein present appellants are directors, this Tribunal has passed the order No. S/311/14/EB/C-II dated 27/5/2014 and directed company to make pre-deposit of 50% of the total duty evaded. In the said order all the issues such as merit of the case and principle of natural justice have been carefully considered and passed a very detailed and reasoned order and this Tribunal found a prima facie case of evasion of duty. As regard the role of the present appellants in the case, it is observed that Shri. Manoj Pyarelal Mittal, Managing Director of the Company deliberately with a planned modus-operandi by preparing parallel Central Excise invoices have evaded excise duty. As regard the role of Shri. Yogesh Kumar Mittal, he has knowingly helped the company and Shri. Manoj Pyarelal Mittal by returning the parallel invoices so that to destroy the same. From the above facts it is clear that both the appellants were collided and master minded the entire offence of evasion of excise duty. As regard submission of the Ld. Counsel that penalty under Rule 26 cannot be imposed since goods not confiscated, we are of the view that it is not necessary that the goods should be confiscated in order to impose penalty under Rule 26 Penalty under Rule 26(i) is imposable on the person who has knowledge that the goods is liable for confiscation. In the present case, while clearance of excisable goods clandestinely without payment of excise duty, both the appellants were having full knowledge that goods are liable for duty and clearance of the same without payment of duty make goods liable for confiscation. Therefore act of the appellants are more than sufficient to invoke Rule 26 of Central Excise Rules, 2002. Since this Tribunal has already taken prima facie view as regard evasion of excise duty against the company in the it s stay order dated 27/5/201, the argument of Ld. Counsel on merit, principle of natural justice of no help - Partial stay granted.

Summary

Issues:
1. Imposition of penalty under Rule 26 of Central Excise Rules, 2002 on the appellants for aiding and abetting evasion of Central Excise duty by the company.
2. Request for unconditional stay by the appellants based on non-compliance with principles of natural justice and lack of confiscation of goods.
3. Interpretation of Rule 26 for imposing penalty without confiscation of goods.
4. Consideration of pre-deposit requirements under Section 35F of Central Excise Act, 1944.

Issue 1: Imposition of Penalty under Rule 26
The judgment involves appeals against an Order-in-Original imposing penalties on the appellants for aiding and abetting evasion of Central Excise duty by the company. The investigation revealed that the company had not accounted for the production of paints and cleared them without paying duty. The penalties were imposed on the Managing Director and Manager of the company under Rule 26 of the Central Excise Rules, 2002. The Tribunal found a prima facie case of duty evasion and upheld the penalties based on the active roles of the appellants in the offense.

Issue 2: Request for Unconditional Stay
The appellants argued for an unconditional stay, citing the ex parte nature of the impugned order and the denial of natural justice principles. They contended that penalty under Rule 26 was imposed without satisfying essential ingredients such as confiscation of goods. However, the Tribunal rejected these arguments, emphasizing that the pre-deposit requirements had been considered in detail previously. The Tribunal noted the deliberate actions of the Managing Director and Manager in evading excise duty, indicating their collusion in the offense.

Issue 3: Interpretation of Rule 26
Regarding the interpretation of Rule 26 for imposing penalties without confiscation of goods, the Tribunal clarified that the rule does not mandate confiscation for imposing penalties. The rule stipulates penalties for individuals involved in transporting, dealing with, or abetting excisable goods liable for confiscation. In this case, the appellants were deemed to have full knowledge of the liability for duty and the clearance of goods without payment, justifying the imposition of penalties under Rule 26.

Issue 4: Pre-Deposit Requirements
The Tribunal considered the pre-deposit requirements under Section 35F of the Central Excise Act, 1944. It directed the appellants to make pre-deposits within a specified period, after which the balance of the penalties would be waived, and recovery stayed during the appeal process. The Tribunal's decision was based on the prima facie view of duty evasion by the company and the active roles played by the appellants in aiding and abetting the offense.

In conclusion, the judgment upheld the penalties imposed on the appellants under Rule 26 for their involvement in aiding and abetting the evasion of Central Excise duty by the company. The Tribunal rejected the request for an unconditional stay, clarified the interpretation of Rule 26, and directed the appellants to make pre-deposits in compliance with the Central Excise Act.