2015 (12) TMI 1257 - AT - Central Excise

Imposition of penalty - Clandestine removal of goods - Held that - Appellant, it is seen that he was the General Manager of the Company w.e.f 2.6.1995. The clandestine removal findings against the main company are for the period from 1.1.1995 to 3.8.1995 i.e., during the period when he was not in the services of the company. On going through the findings of the Commissioner for imposition of penalty upon him, it is seen that the penalty stand imposed on the sole ground that he was the General Manager of the company and as such, was responsible for production and clearance of the goods without payment of duty. Apart from the above observations made by the adjudicating authority there is no evidence, at all, to show that the said appellant was in any way connected with the clandestine activities of the manufacturing unit. Merely because he was the General Manager for a limited period, cannot make him liable to penalty under Rule 209A unless there is evidence to show that such clandestine activity was being carried out with his knowledge and consent and under his instructions. - Decided in favour of appellant.

Summary

Issues:
Imposition of penalty under Rule 209A of Central Excise Act, 1944.

Analysis:
The appeal challenged the imposition of a penalty of Rs. 50 lakhs under Rule 209A of the Central Excise Act, 1944. The appellant argued that this was the third round of litigation, with the penalty being increased to Rs. 50 lakhs in the second round from Rs. 1,00,000 in the first round. The appellant, who joined as the General Manager of the company during a specific period, was held responsible for production and clearance of goods without payment of duty. However, the Tribunal found that there was no evidence connecting the appellant to the clandestine activities of the manufacturing unit during the period in question. The Tribunal emphasized that the penalty cannot be enhanced when the matter was remanded for reconsideration, especially when the original penalty was not challenged by the Revenue. It was concluded that the appellant cannot be held liable for the penalty under Rule 209A without evidence showing his knowledge, consent, or instructions in the clandestine activities. Therefore, the penalty imposed on the appellant was set aside, and the appeal was allowed with consequential relief.

This judgment highlights the importance of evidence in imposing penalties under Rule 209A of the Central Excise Act, 1944. It underscores that mere association with a company during a specific period does not automatically make an individual liable for penalties related to clandestine activities. The judgment also clarifies that penalties cannot be arbitrarily enhanced during reconsideration of a matter, especially when the original penalty was not contested by the Revenue. The decision emphasizes the need for a clear connection between an individual's actions and the alleged violations to justify the imposition of penalties under Rule 209A.