2017 (10) TMI 336 - AT - Central Excise

Clandestine removal - Shortage of goods - molasses - penalty - Held that - there is no mitigating or ameliorating factors in favor of the appellant No.1 M/s. VPPL to further reduce the penalty imposed on them. The facts on record clearly prove that there has been clearances of molasses initially of 53.520 MTs through four tankers, where no Central Excise invoices accompanied the goods. Further, there has been no reasonable explanation for the shortage of 1055.68 MTs of molasses found in the factory of the appellant-company, when compared with the stocks recorded in RG-1 Register. When it is so, the penalty imposed of ₹ 1 lakh on the appellant No.1 cannot be reduced further - penalty upheld. The penalty of ₹ 5,00,000/- has been imposed on appellant No.2, whereas he contests that day-to-day affairs were looked after by Lab In-charge. He has been only overall in-charge of the appellant-company. However, the appellant No.2 being overall in-charge cannot completely absolve himself of the responsibility of complying with the law of Central Excise in respect of payment of appropriate duty of Central Excise and following the right procedures as prescribed by the law of Central Excise - considering the fact that he has been overall in-charge and not looking after day-to-day affairs of the factory and when the appellant no.1, who are the main offenders and main noticee, have been imposed a penalty of ₹ 1 lakh, the quantum of ₹ 5,00,000/- imposed on appellant No. 2 does not seem to be proportionately appropriate. Considering the fact that the main accused has been imposed a penalty of ₹ 1 lakh, the penalty imposed on the appellant No. 2 is reduced from ₹ 5,00,000/- to ₹ 50,000/-. Appeal allowed in part.

Summary

Issues:
Penalties imposed on the appellant company and its Executive Director for Central Excise violations.

Analysis:
The case involved M/s. Venkateshwara Power Project Ltd. (VPPL) appealing against penalties imposed on them in relation to the demand of duty and other charges. The Central Excise officers intercepted and seized molasses from the appellant-company due to lack of accompanying Central Excise invoice. Subsequent investigations revealed a significant shortage of molasses compared to recorded stock. The appellant contested the penalties, arguing that there was no evidence of clandestine clearances and that the penalties were not justified. The Tribunal considered the facts and submissions, upholding the penalty of ?1 lakh on VPPL due to unaccompanied goods and unexplained shortages. However, the penalty of ?5,00,000 on the Executive Director was reduced to ?50,000 as he was not directly involved in day-to-day operations and the main offenders had already been penalized. The Tribunal found the penalty reduction for the Executive Director to be proportionate, modifying the impugned order accordingly.

In conclusion, the penalties imposed on the appellant company and its Executive Director were the main issues in this case. The Tribunal upheld the penalty on the appellant company due to unaccompanied goods and unexplained shortages, while reducing the penalty on the Executive Director considering his role and the penalties already imposed. The impugned order was modified to reflect the reduced penalty for the Executive Director, partially allowing his appeal while rejecting the appeal of the appellant company.