2016 (12) TMI 148 - AT - Central Excise

Imposition of penalty u/r 25 of Central Excise Rules, 2002 - wrong description and wrong classification of the goods sold to M/s Aster Tele Services Pvt.Ltd. - Held that - It is seen that M/s Aster Tele Services Pvt. Ltd had accepted the liability and paid the demand, interest and penalty. Thereupon the proceedings were considered to be concluded against M/s Aster Tele Services(P)Ltd. and no show cause notice was issued to them. Therefore, J agree with the view of the authorities below and the Ld. AR that the appellant cannot be considered as a co-noticee and cannot be absolved from the liability under the first proviso to Subsection (2) of Section 11(A). However, taking into consideration that the appellant was only a dealer and that M/s Aster Tele Services Pvt.Ltd have paid the liability, I hold that penalty imposed is on the higher side and the same is reduced to ₹ 1.00 lakh - The impugned order is modified to the extent of reducing the penalty from ₹ 1,50,000/- to ₹ 1.00,000/- - appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Challenge against imposition of penalty under Rule 25 of Central Excise Rules, 2002.

Analysis:
The appellant challenged the penalty imposed under Rule 25 of Central Excise Rules, 2002, in response to a show cause notice alleging wrong description and classification of goods sold to M/s Aster Tele Services Pvt. Ltd. The department concluded proceedings against M/s Aster Tele Services Pvt. Ltd. after they accepted liability and paid the dues. The appellant, a dealer for the goods, then faced the show cause notice and was penalized Rs. 1,50,000 by the original authority, a decision upheld by the Commissioner(Appeals). The appellant argued that being a co-noticee, they should be absolved from liability, citing relevant case laws. The department defended the penalty, stating the appellant cannot claim co-noticee status as no notice was issued to M/s Aster Tele Services Pvt. Ltd.

The Tribunal considered the arguments and facts presented. While acknowledging that M/s Aster Tele Services Pvt. Ltd had settled the liabilities, the Tribunal agreed with the department that the appellant cannot be considered a co-noticee under the law. However, recognizing the appellant's role as a dealer and the payment made by M/s Aster Tele Services Pvt. Ltd, the Tribunal found the penalty of Rs. 1,50,000 to be excessive. Consequently, the Tribunal reduced the penalty to Rs. 1,00,000, modifying the impugned order accordingly. The appeal was partly allowed with the revised penalty amount.

This judgment highlights the importance of liability in cases involving penalties under Central Excise Rules, emphasizing the distinction between parties involved and the impact of settlements on penalty amounts. The decision showcases the Tribunal's balancing act between upholding legal provisions and considering the circumstances of the case to arrive at a just outcome.