2017 (1) TMI 225 - AT - Central Excise

Clandestine removal - Interest - Penalty - Rule 25 of CER 2002 - Held that - find that as per undisputed facts of the case the clandestine removal made by the company M/s. Vir Alloys 1, 55, 799/- the equal amount of penalty was imposed upon the appellant as personal penalty. The appellant is otherwise liable for penalty under Rule 26 of the Central Excise Rules 2002 - As per this position I am of the view that penalty of equal amount of duty i.e. 1, 55, 799 is not justifiable therefore it requires reduction. I therefore reduce the penalty from 1, 55, 799 to 38, 950/- - Appeal partly allowed.

Issues:
1. Imposition of penalty on the appellant for excise duty evasion.
2. Applicability of penalty provisions under Section 11AC and Rule 25 of Central Excise Rules, 2002.
3. Liability of the appellant for penalty in the case of clandestine removal by the company.
4. Interpretation of legal precedents cited by the appellant's counsel.
5. Justifiability and reduction of penalty amount imposed on the appellant.

Analysis:

1. The appeal was filed against an Order-in-Appeal confirming a demand of Central Excise duty, interest, and penalty against the company for clandestine removal. The appellant, an employee of the company, sought waiver of penalty since the company had paid the entire dues. The main issue was the imposition of penalty on the appellant in relation to the excise duty evasion.

2. The appellant argued that penalty under Section 11AC read with Rule 25 was wrongly imposed as it was not applicable for personal penalty. The Revenue contended that mentioning the wrong provision did not vitiate the proceedings, citing legal precedents. The Tribunal noted the arguments and legal references presented by both sides regarding the applicability of penalty provisions.

3. The Tribunal found that the clandestine removal by the company had been established, and the appellant, as the Chief Executive Officer, was held responsible for the act. Despite the company paying the dues, the appellant was liable for penalty due to his involvement in the removal. The Tribunal clarified the distinction between Section 11A(2) and Section 11AC regarding the payment of duty, interest, and penalty.

4. The appellant's counsel cited various judgments to support the argument for waiving the penalty. However, the Tribunal found these judgments not applicable to the present case due to differences in the provisions invoked by the company. The Tribunal emphasized that the appellant's liability for penalty was established based on the offense committed, regardless of the company's actions.

5. After considering all submissions and the facts of the case, the Tribunal concluded that the penalty amount imposed on the appellant was not justifiable. The Tribunal reduced the penalty from the original amount to a lower sum, taking into account the appellant's liability under Rule 26 of the Central Excise Rules, 2002. The appeal was partly allowed, modifying the impugned order to reflect the reduced penalty amount.

This detailed analysis of the judgment addresses the issues raised in the appeal, the arguments presented by both parties, the legal interpretations made by the Tribunal, and the final decision regarding the imposition and reduction of the penalty on the appellant.

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