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2017 (9) TMI 704 - HC - Central ExciseInterpretation of statute - Penalty u/r 209A of CER, 1944 - Whether provisions of Rule 209A are attracted only if the persons concerned have physically dealt with excisable goods with the knowledge or belief that such goods were liable to confiscation & that the provisions are not attracted unless the person concerned has physically dealt with such goods? - Held that - reliance placed in the case of The Commissioner of Central Excise Versus M/s. Ramesh Kumar Rajendra Kumar & Co. & others 2010 (9) TMI 371 - BOMBAY HIGH COURT , where it was held that Rule 209A can be invoked and the penalty imposed only when the person has physically dealt with the excisable goods with the knowledge or belief that the goods are liable for confiscation. In the present case, the allegation was of unused gate passbooks being misused by the Respondents for the purpose of issuing fake/forged gate passes to assist M/s. Singhal Swaroop Ispat Ltd. There was no case of the Respondents having physically dealt with the excisable goods with the knowledge or belief that such goods were liable to confiscation - rule 209A cannot be invoked. Appeal dismissed - decided against Revenue.
Issues:
1. Interpretation of Rule 209A of the Central Excise Rules, 1944 regarding penalty imposition. 2. Misuse of gate passbooks leading to issuance of fake/forged gate passes. 3. Allegations against the respondents for involvement in misuse of modvat credit. 4. Applicability of penalty under Rule 209A based on physical dealing with excisable goods. Analysis: Issue 1: Interpretation of Rule 209A of the Central Excise Rules, 1944 regarding penalty imposition The appeal challenged an order by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) concerning the imposition of penalties under Rule 209A of the Central Excise Rules, 1944. The substantial question of law raised was whether the penalties were correctly imposed only when the individuals physically dealt with excisable goods with the knowledge or belief of their liability to confiscation. The High Court cited relevant legal provisions and previous judgments to interpret the application of Rule 209A in penalty imposition cases. Issue 2: Misuse of gate passbooks leading to issuance of fake/forged gate passes The case involved a partnership firm accused of misusing gate passbooks to issue fake/forged gate passes, enabling another entity to avail modvat credit. The investigations revealed the alleged involvement of the respondents in facilitating this misuse. The Adjudicating Authority imposed penalties under Rule 209A based on these actions, leading to appeals and subsequent legal proceedings. Issue 3: Allegations against the respondents for involvement in misuse of modvat credit Respondents were accused of being involved in the misuse of modvat credit by issuing fake gate passes. The penalties imposed by the Adjudicating Authority were challenged in appeals filed with CESTAT. The High Court analyzed the evidence and legal arguments presented by both parties to determine the correctness of the penalties imposed under Rule 209A. Issue 4: Applicability of penalty under Rule 209A based on physical dealing with excisable goods The High Court examined the interpretation of Rule 209A in light of previous judgments and legal principles. It was established that the penalty under Rule 209A could only be imposed when individuals physically dealt with excisable goods with the knowledge or belief of their liability to confiscation. In this case, as the respondents were not directly involved in physically handling the goods, the High Court upheld the decision of CESTAT to set aside the penalties imposed on them. The judgment clarified the requirement of physical dealing with excisable goods for the application of Rule 209A penalties.
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