2017 (12) TMI 541 - AT - Central Excise

Penalty u/r 26 - violation of import conditions - case of the Revenue is that such export did not happen and the goods have been diverted in domestic market in violation of condition for duty free procurement - Held that - The Role of Shri Pankaj Agrawal has been brought out clearly in the impugned order. he was handling the sales of the main party and was closely connected with the business activities to the effect of virtually managing the same. Similarly, the other two appellants, who themselves had a separate unit under their control, Shri Krishna Kumar Gupta and Shri Pramod Agrawal, were the Directors of M/s Ultimate Mercantile Ltd. and it is brought out in the investigation that Shri K.K. Gupta also a Director of M/s Unique Ltd. opened a bank account in his capacity as the Director and also opened a joint account with shri Pramod in the same bank. These two bank accounts were extensively used to transfer the sale proceeds and the illegal gains that accrued by diversion of goods which were originally procured without payment of duty and intended for export, but diverted to domestic market on a profit - penalty upheld - appeal dismissed.

Summary

Issues:
- Recovery of duty from the appellant
- Allegation of procuring excisable goods without payment of duty
- Imposition of penalty under Rule 26 of Central Excise Rules, 2002
- Defence submission regarding lack of prior knowledge of diversion
- Contention of the Revenue regarding involvement in deliberate acts leading to revenue loss
- Role of each appellant in the illicit transactions
- Analysis of evidences and defence submissions
- Decision on the imposition and quantification of penalties

Recovery of Duty and Imposition of Penalty:
The case involved three appeals against an order confirming the recovery of duty from M/s Shree Balajee Impex for procuring excisable goods without payment of duty with the intention of exporting them. The appellants were imposed with penalties under Rule 26 of Central Excise Rules, 2002 for their alleged involvement in the illicit transactions of the main party. The defence argued that the appellants had no prior knowledge of the diversion and violation of export conditions, seeking to set aside the penalties.

Role of Each Appellant and Analysis of Evidences:
The Revenue contended that clear evidences showed the appellants knowingly participated in deliberate acts resulting in revenue loss and abetted the main party in diverting goods to the domestic market. The impugned order highlighted the roles of each appellant, such as Shri Pankaj Agrawal managing sales, Shri Krishna Kumar Gupta and Shri Pramod Agrawal being directors of separate units involved in illegal activities. Evidences included bank accounts used for transferring proceeds from the diversion of goods.

Decision on Penalties and Quantum:
After hearing both sides and examining the case records, the Tribunal found no merit in the appeals against the penalties imposed under Rule 26. The Tribunal noted that the demands involved a significant amount, yet the penalties were relatively low at &8377; 2 lakhs each. Consequently, the Tribunal dismissed the appeals, upholding the imposition and quantification of penalties as justified based on the evidences and submissions presented.

This judgment underscores the importance of thoroughly analyzing evidences, assessing individual roles in illicit activities, and determining penalties proportionate to the gravity of the offenses committed, ultimately upholding the principles of revenue protection and compliance with excise regulations.