2016 (11) TMI 861 - AT - Central Excise

Clandestine removal of manufactured goods - Plastic Lay Flat Tubes, Plastic Films etc. falling under Chapter 39 of Central Excise Tariff Act, 1985 - Held that - I find that the appellant M/s. Vardhman Polypacks had paid the entire amount of duty, interest and penalty within 30 days from the date of order, accordingly, they are eligible to the benefit to discharge 25% of penalty as observed in the Order-in-Original. Since, they had complied the condition laid down in the said Order, accordingly, the appeal is infructuous and dismissed as withdrawn. In the case of the Appellant, Shri Haresh D. Shah, partner, the penalty is unsustainable as penalty on partnership firm has already been imposed and confirmed by the authorities below, in view of the decision of the Hon ble Gujarat High Court in the case of Pravin N. Shah vs. CESTAT 2012 (7) TMI 850 - GUJARAT HIGH COURT . As regards the personal penalty on Shri Satyendra R. Yadav, employee of the, keeping in view the role played by him and his position in the Firm, and in the interest of justice, the penalty is reduced from ₹ 25,000/- to ₹ 10,000/- Appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
Appeal against order passed by Commissioner (Appeals) regarding duty, interest, and penalty imposition on manufacturing firm for alleged clandestine clearance of excisable goods.

Analysis:
The case involved three appeals against an order passed by the Commissioner (Appeals) regarding duty, interest, and penalty imposition on a manufacturing firm engaged in the production of Plastic Lay Flat Tubes and Plastic Films falling under Chapter 39 of the Central Excise Tariff Act, 1985. The department conducted an investigation revealing alleged clandestine manufacturing and clearance of excisable goods without duty payment. A demand notice was issued for duty recovery, interest, and penalties on the firm and other co-noticees/appellants. The original adjudicating authority confirmed the demand with penalties, which were partly allowed by the Commissioner (Appeals) for co-noticees but rejected for the firm, leading to the present appeals.

The advocate for the appellants argued that the firm had paid the entire duty liability, interest, and 25% of the penalty as ordered by the original authority. The appeal was rejected by the Commissioner (Appeals) without considering the submission that 25% of the penalty had been discharged in compliance with Section 11AC of the Central Excise Act, 1944. The advocate further contended that simultaneous imposition of penalties on the partnership firm and partners was not valid, citing a decision of the Hon'ble Gujarat High Court. Regarding the penalty on an employee, it was argued that the penalty was too harsh as the employee acted on the employer's instructions.

The authorized representative for the Revenue argued that since the firm had complied with the conditions of Section 11AC, the appeal by the firm was infructuous. For other appellants, it was stated that penalties had already been substantially reduced by the Commissioner (Appeals), hence further reduction was not warranted.

After hearing both sides and examining the records, the tribunal found that the firm had paid the duty, interest, and penalty within the specified time, making them eligible for the benefit of discharging 25% of the penalty as per the Order-in-Original. Consequently, the appeal by the firm was dismissed as withdrawn. Regarding the penalty on a partner, it was deemed unsustainable as the penalty on the partnership firm had already been imposed and confirmed. The penalty on an employee was reduced from ?25,000 to ?10,000 considering the role played by the employee and in the interest of justice.

In conclusion, the appeals were disposed of based on the compliance with penalty conditions and legal precedents, resulting in the withdrawal of the firm's appeal and reduction of penalties for the partner and employee.