2017 (9) TMI 863 - AT - Central Excise

Clandestine removal - shortage of goods - Held that - the demand of duty of ₹ 26.71 lacs was confirmed, party was in appeal, even though Tribunal has remanded the matter, the adjudicating authority was suppose to decide the matter relates to the demand of ₹ 26.71 lacs only, for the reason that demand which was dropped by the Commissioner was not challenged by the Revenue therefore dropping the said demand attained finality. Penalties - Held that - the penalty imposed on the appellants are excessive which deserve to be reduced considering the nature of the case and their role. Since the duty should not have been confirmed to the tune of ₹ 42 Lacs, the penalty commensurate to the said amount is also not proper. I therefore reduce penalty on Shri. Pankaj Jaju from ₹ 25 lacs to ₹ 4 Lacs and on other appellants i.e. i.e. Unique Trading Corporation penalty of ₹ 2 lacs to ₹ 25,000/-. In respect of Victor Industries, Crown Industries and Suman Bardia, penalty of ₹ 15,000/- reduced to ₹ 10,000/-. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
1. Confirmation of demand and penalties in denovo adjudication order.
2. Imposition of penalties on the appellants.
3. Role and involvement of the appellants in the case.
4. Reduction of penalties imposed on the appellants.

Issue 1: Confirmation of demand and penalties in denovo adjudication order

The case involved the confirmation of a demand of &8377; 42 lacs in denovo adjudication, which was higher than the initial demand of &8377; 26.71 lacs. The Tribunal had remanded the matter to the adjudicating authority for re-adjudication, but the authority went beyond the scope by confirming the higher demand. The adjudicating authority upheld the demand of &8377; 42 lacs due to the dismissal of the appeal by M/s. Sunrise Zinc Ltd, making the demand final. The Tribunal acknowledged that the demand dropped by the Commissioner was not challenged by the Revenue, hence attaining finality. The adjudicating authority's decision to confirm the increased demand was deemed incorrect by the Tribunal.

Issue 2: Imposition of penalties on the appellants

Penalties were imposed on the appellants, including a penalty of &8377; 25 lacs on Pankaj Jaju and varying amounts on other entities. The appellant argued that the penalty on Pankaj Jaju was illegal as no charge of confiscation of goods was made, a prerequisite for imposing penalties under Rule 26. However, the Tribunal found evidence indicating Pankaj Jaju's active involvement in the clandestine removal of goods, justifying the penalty. The penalties on other appellants were also contested, but the Tribunal noted indirect involvement in dealing with goods cleared clandestinely, leading to the penalties being upheld, albeit reduced due to excessiveness.

Issue 3: Role and involvement of the appellants in the case

The Tribunal analyzed the roles of the appellants in the case, particularly focusing on Pankaj Jaju's executive position at M/s. Sunrise Zinc Ltd and his active involvement in the clandestine operations. Statements from company officials and corroborative evidence highlighted Jaju's significant role in the illicit activities. The other appellants were found to have indirect involvement in dealing with the goods, supporting the imposition of penalties, albeit at reduced amounts considering their roles and circumstances.

Issue 4: Reduction of penalties imposed on the appellants

Considering the nature of the case and the roles of the appellants, the Tribunal deemed the initially imposed penalties excessive. Therefore, the penalties were reduced significantly. Pankaj Jaju's penalty was reduced from &8377; 25 lacs to &8377; 4 lacs, while penalties on other entities were also decreased. The Tribunal emphasized that since the duty demand was excessive, the penalties needed to be proportionate, leading to the reduction in penalty amounts for all appellants. The appeals were partly allowed with the revised penalty amounts.

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