2017 (1) TMI 300 - AT - Central Excise

Imposition of penalty on Mr. S.K. Bhatnagar, Whole Time Director and Shri R.K. Agarwal, DGM (Finance) - scope of Rule 26 - Held that - during the period involved Mr. S.K. Bhatnagar was not working with the Company namely Kashipur Sugar Mills Ltd.. Therefore, the charges levied by the Revenue against the appellant, Shri S.K. Bhatnagar cannot be sustained. In case of the charges levied against Shri R.K. Agarwal, the appellant, the findings given by Hon ble Uttarkhand High Court in the case of SK. Bhatnagar and RK. Agarwal Versus Commissioner of Central Excise, Meerut-II 2015 (5) TMI 243 - UTTARAKHAND HIGH COURT are relevant and would be applicable for the present proceedings also, where it was held that Petitioners are not guilty of issuing any excise duty invoice without delivery of the goods nor such invoice was used to take ineligible benefit under the Act or the Rules nor both the petitioners were found guilty in transporting, removing or depositing any excisable goods, which were liable to be confiscated, no penalty - penalty not sustained. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Imposition of personal penalties on appellants by the Commissioner of Central Excise.
2. Appeal against Order-in-Original dated 27/1/2012 passed by Assistant Commissioner, Haldwani.
3. Applicability of Rule 26 of the Central Excise Rules, 2002.
4. Interpretation of Rule 26 in relation to the case.
5. Relevance of the High Court's order in Writ Petitions.

Analysis:
1. The appellants filed appeals against the imposition of personal penalties by the Commissioner of Central Excise. The Advocate argued that during the relevant period, one appellant was not associated with the company in question, and the other was not involved in the activities mentioned under Rule 26 of the Central Excise Rules. The High Court had previously quashed penalties against the appellants in a similar case. The Revenue contended that the penalties were justified due to the expansion of the unit's capacity.

2. The Tribunal noted that one appellant was not working with the company during the period in question, thereby dismissing the charges against him. Regarding the other appellant, the Tribunal referred to the High Court's order in Writ Petitions, which highlighted that the penalties imposed were beyond the scope of Rule 26. The High Court's interpretation led to the conclusion that the penalties against both appellants could not be sustained.

3. Rule 26 of the Central Excise Rules, 2002 was analyzed in detail. The rule specifies penalties for certain offenses related to excisable goods. The High Court's order emphasized that the penalties imposed in this case did not align with the provisions of Rule 26. The Tribunal concurred with this interpretation, leading to the allowance of the appeals and the quashing of the penalties.

4. The Tribunal's decision was based on a thorough examination of the facts and legal provisions. It highlighted that the penalties imposed on the appellants were not justified under Rule 26. The Tribunal's reliance on the High Court's order in similar cases further strengthened the appellants' position and led to the favorable outcome in these appeals.

5. In conclusion, the Tribunal allowed the appeals, providing consequential relief to the appellants based on the interpretation of Rule 26 and the High Court's previous rulings. The judgment emphasized the importance of legal clarity and adherence to statutory provisions in imposing penalties under the Central Excise Rules.